Avoid mortgage stress – know your credit report

One of the biggest purchasing decisions in an Australian’s life is the decision to buy property, as it requires careful planning and research, as well as a significant financial commitment over time. While it can be an exciting time, especially for first time buyers, it can also be a stressful period given the amount of money that usually needs to be borrowed.

Avoid the additional stress of having a mortgage application rejected by a credit provider, by following these simple steps:

Check your credit report

When you apply for a home loan, the credit provider will want to get a picture of your ability to pay them back. In addition to looking at your income and other financial information, lenders will check your credit report.

If you’ve ever applied for credit in the past, such as a mobile phone contract, credit card, or loan, you will most likely have a credit report. This report will include any ‘negative’ credit information, such as previous defaults on bill repayments, or any court judgement information. Because credit providers will look at this information when considering your creditworthiness, you should know what’s in there before you apply for a home loan.

Correct any inaccurate information

Default information will stay on your credit report for five years, so it’s essential to examine the details of what’s currently listed, as you may be able to address negative information and dispute or correct any inaccuracies.

In most cases, credit reporting agencies such as illion can correct small inaccuracies on your report including incorrectly listed personal details, while your credit provider should be contacted if you are disputing a listing about an outstanding debt.

Make payments on debts

Although default information cannot be removed from your credit report for five years (unless it can be proven to be inaccurately listed), you can still take steps to improve how a potential lender views your creditworthiness. By clearing an outstanding debt, your credit report listing will be updated to show that you have made repayments. New legislation will soon capture additional details of your repayment history, so making regular and on-time payments on all your current debts will also present a more positive picture of your financial health.

Avoid multiple applications

Your credit report may contain previous applications for credit. Frequent and multiple applications, especially with multiple lenders, may suggest poor management of existing credit and debts, painting an overall negative picture of your credit worthiness.

Check your credit report »

Also read: Managing your money with a mortgage