Home Buyers Advisory Blog

DECLINED even though you have a ‘GOOD CREDIT SCORE’ - What’s up?

Posted by Aidan-John Rothman on 28 Nov 2018 3:22:54 PM

You did the responsible thing and checked your credit profile before you went house hunting... and your score was ‘good’.

You found your dream home in a suburb that you love because it’s perfect for the kids with great schools. You and the whole family were SO EXCITED and then you got DECLINED ON CREDIT? This is what went wrong...

Credit bureaus scores and bank scores are different!

Before a bank will grant you a loan to purchase a home the bank will need to be convinced that you are very likely to pay back the loan.

To do this banks will look at how well you manage your finances and, in particular, they will want to see that you have a good history of paying back any loans that you have been granted in the past.

To determine this they will look at the information that credit bureaus compile about your payment performance to assess your credit profile but each bank has their own proprietary scorecard but the table below gives an indication of some of the positive and negatives that will affect your likelihood of getting a loan.

In particular, we have highlighted those factors that our research shows can affect you home loan score while not impacting your credit bureau score as much.

Positives Negatives
  • history of paying all your accounts on time and in full
  • Low utilisation of revolving credit balances
  • Some use of credit to buy assets such as a car in the past 24 months
  • Any current arrears amounts on any accounts
  • High utilisation on your revolving credit accounts such as credit cards and retail store cards
  • Use of micro lenders for credit
  • Large number of accounts (particularly if this could gives you access to too much credit)
  • Defaults/Judgements

You could benefit by getting an experienced homeownership consultant to help you assess your likelihood of getting a home loan by asking them to help analyse your current credit profile.

They may also be able to advise you on the actions you can take to improve your profile to get ready to purchase a home.

Do you need help to find out how likely you are to get a home loan?

Find out if you are financially ready for homeownership by completing a home buyer readiness assessment.
 
The assessment will reveal:
  • how much you can afford to buy for;
  • house prices in the areas you are interested in; and
  • your likelihood of getting a home loan.

I want to find out it I am home buyer ready

Your assessment is free and there are no obligations.

 

Topics: Buying a home, Credit scores, Credit profile