Have you been researching your options for a loan, or perhaps even using View Home Loans to get a quote on a loan, but are worried your credit history may affect your ability to secure financing? Or perhaps you have never even thought about your credit history, and you have been asked by our Home Loan survey whether you consider your credit history relevant to your ability to secure finance. In this case, it is worth looking in detail just how your purchases yesterday are influencing your ability to move forward today.
What is a credit score/credit history?
Your credit score is generated from your credit history. Simple! You can access your credit score for free (be cautious of companies that charge you for an initial score) through a number of providers, including Creditsavvy, Credit Simple, Finder, and Getcreditscore.
It is important to find out your credit history not just because it helps you in securing financing, but because it helps protect yourself from fraud or ensure that your credit history is factually correct.
Can you get a home loan with a poor credit score?
Yes. A lender will take a number of things into consideration when deciding your suitability for a loan. These can include:
- Your current employment status
- Your current income
- Your employment and income history
- Your credit history
- The extent of your saved deposit
- Other savings
- Other assets and their ongoing costs
- Whether or not you have declared yourself bankrupt in the past 7 years.
In other words, your suitability for a loan is nuanced. If you have a large enough deposit for a loan, have a regular income and one that is sufficient to pay off the loan, then a lender may be more open to approving you for a loan.
How to improve your chances with a poor credit history
The best way to increase your ability to secure financing is to find financial freedom before you apply. Getting yourself into the best possible financial position, even if you have existing debt, is the best way to demonstrate to a lender that you have the long-term capability to pay off a loan.
The next thing to do is try to improve your credit rating. Your rating changes month-to-month, based on your ability to pay your debts and your purchasing habits through credit, so try to change your habits and limit the time it takes you to pay off your regular debts (or better yet, eliminate your credit debts entirely). Improving your credit score will open up better loan opportunities, where you may potentially pay less over time.