How to improve your credit score

Here is a list of some quick tips to help you get the best possible credit score. While there is no guarantee that all of these options will immediately boost your credit score, they may help you establish habits that will strengthen your credit score.

Lenders/credit both Prime and Non Conforming Lenders will want to see that you can repay a home loan on time so they look at your current repayment history of bills that you should pay on time:

Your rent

Your credit cards

Your medical and utility bills and any other service that may use a collection agency for the recovery of delinquent accounts.

Check your credit report as it will:

Give you an idea if you have any defaults or negative repayments history recorded in your report. If this is the case you may require a Bad Credit Home Loan.

Give you time to get the credit report corrected before a lender/credit adviser accesses your report; and enable you to verify your credit score with a credit reporting agency.Note: Be aware that due to the changes in Positive Credit Rating legislation lenders have the ability to access your credit reports and can see the past 24 months of your repayment history.

Maintain your Available Credit

Before applying for a home loan don’t open any other credit cards or lines of credit. It is because lenders/credit providers will see you as being a risk if you suddenly take out loans for cars, electronics, furniture, etc.

Consider paying off your balances as a lower debt will improve your debt-to-credit ratio. This can be illustrated by the following example:

Having a total debt of $4,000 with a $20,000 available credit will look better than having just $500 in debt with $800 available credit.

Establish a Savings History

Your savings will need to add up to around 5 percent of the purchase price of the property if you need to show “Genuine Savings” which is generally required on mortgages above 85% with Prime Lenders.

Note: Saving a larger deposit should help to reduce or avoid paying “Lenders Mortgage Insurance” (LMI) and you may even be offered a more competitive interest rate by the lender/credit provider.

Avoid applying with too many Lenders/Credit Providers

Avoid submitting your home loan applications to several different lenders/credit providers at once. It is because these loan applications will appear on your credit report.

Your Employment Stability

If you have had the same job for more than two years, then this is a big tick. So, prior to applying for a home loan, try to establish a stable employment history as it will enable you to make regular loan repayments.

If you have changed your job recently, do not worry. You may satisfy the requirements of lenders/credit providers, if:

You have been in a similar role

You have been in the same industry.

Disclose all Information

Always be upfront with your lender or broker and disclose all information as non-disclosure of relevant information may result in your home loan application being declined.

Seek Expert and Professional Advice

All these tips should help you to improve your credit score. However, you should speak to a professionally qualified and expert mortgage broker who can help you to create a personalised credit improvement plan.