Amongst the few things you have to do when buying a new home is to check your credit rating to ensure that banks are more inclined to approve your new home loan. What happens when you are delivered with a result that might stop your transaction in its tracks? Having a bad credit record and being blacklisted can definitely put a damper on an otherwise exciting event.
On the positive side, there are ways around getting your home loan approved, even when your score isn’t too great. It all depends on who, what and how you owe your creditors. It also pays to ensure that you didn’t become a victim of fraud if you suddenly have a bad score when you know it can’t be true. The ultimate solution, however, is to take some time to completely clear your score and ensure that the bank has no reason to turn you away.
Getting Your Finances In Order
Every South African can request their credit score report at no cost once a year. This is a very important step in your journey to buying a new house. It should be something you do well in advance to allow you some room to improve your score before actually applying for your loan.
Assess all of your outstanding debts, credit cards and formulate a plan to pay them off as you can. The ideal is to stick to paying them the correct amount at the right time, every time. This shows diligence and commitment to your creditor and can eventually reflect positively on your record.
Keep in mind that your record is applicable for two years prior to the date of your request. Your bank will be privy to all of your records during this time. If you make an effort to keep your score clear of bad debts, they will be more inclined to support you.
It also helps if you are able to put a relatively large deposit down, effectively decreasing the value of your loan and lessening your risk with the bank. Manage your finances in such a way that you save anything you can after taking care of your creditors. You can achieve a great credit score in a year or so.
Other great tips include:
- Cancel all unnecessary accounts and memberships that you do not use.
- Ensure that your spouse’s credit rating is healthy since the bank will consider both of your scores.
- Never pay your creditors later than the 7th of each month.
- Do not ignore any correspondence from your creditor.
- Remember that most banks will allocate up to 30% of your gross income towards your monthly repayment. Determine your affordability accordingly.
The best way to look after your credit score is to simply keep building a good credit history that reflects a healthy financial situation. This way you will have nothing to worry about and will be that much closer to owning your new home.
Contact one of our agents today if you want to find out whether you qualify for a loan on a home in our brand-new The Milkwood Townhouse Complex. Situated in the idyllic Kuils River, this is the perfect place to own your first home.