5 ways to boost your credit score
A credit score is a number representing your financial history. It is calculated using the information in your credit report, which includes your payment history, the number and type of accounts you have, the amount of debt you have, as well as the length of your credit history. If you’re in the market for credit or a loan, it’s in your interest to boost your credit score as much as you can.
Credit scores are taken into consideration by potential lenders and creditors when determining whether or not to approve an applicant for credit. For example, if you’re applying for a home or business loan your mortgage broker may discuss your credit score with you. It can serve as an indication as to how likely you are to pay back the loan.
Your credit score will typically sit on a scale of zero to 1,000 or zero to 1,200, depending on the credit reporting agency. Higher credit scores demonstrate responsible past credit behaviour, which may instil more confidence in potential lenders and creditors when they are evaluating a request for credit. If you have a lower score, financial institutions will be less inclined to allow you to borrow large sums. If they do, your interest rates may be higher – as motivation to repay the loan sooner rather than later.
Here’s a general breakdown of credit score ranges from the three major credit agencies in Australia:
| Credit Score Range | Illion | Equifax | Experian |
| Excellent | 800 – 1000 | 833 – 1200 | 800 – 1000 |
| Very good | 700 – 799 | 726 – 832 | 700 – 799 |
| Average | 500 – 699 | 622 – 725 | 625 – 699 |
| Fair | 300 – 499 | 510 – 621 | 550 – 624 |
| Low | 0 – 299 | 0 – 509 | 0 – 549 |
It’s important to remember that everyone’s financial and credit situation is different, and there is no perfect score that will guarantee better loan rates and terms.
Now that we’ve established what credit scores are all about, here are 5 tips to keep front of mind if you want to boost your credit score and establish or maintain responsible credit behaviours:
1. Pay your bills on time, every time.
A record of consistent and punctual payments can contribute to a stronger credit score. This includes all your bills. Late or missed payments on credit cards, mobile phones, utilities, or your rent may be reported to credit agencies, which will likely negatively affect your credit scores. If you’re having trouble with paying a bill, contact the service provider immediately to ask about alternative arrangements or payment plans. Avoid skipping payments, even if you’re contesting a bill. Creating a monthly budget and scheduling automatic payments for bills and other repayments could help you avoid late or missed repayments.
2. Pay off your debts promptly.
Again, having evidence of prompt repayments will contribute to a strong credit score. On the other hand, making late payments can damage your credit. Although paying off a debt can initially cause scores to dip temporarily, in general you could see an improvement in your credit as soon as one or two months after you pay off the debt.
3. Keep your credit card balance below the limit.
A higher balance compared to your credit limit may negatively impact your credit score. Keeping your balance low with consistent and on-time repayments will look good on your credit report. Limit new applications for credit or loan products where you can and if appropriate, consider lowering the limit on any credit cards you have. This will put a firmer limit on the amount of debt you can accrue.
4. Apply for credit cautiously.
Applying for multiple credit accounts within a short period may have a negative effect on your credit score. Whether you are approved or not, your application for a new credit or loan products will be visible on your credit report. Multiple applications for credit within a short time can flag to lenders that you are under credit pressure.
5. Check your credit reports regularly.
It could be worth checking your credit report carefully to ensure all the information listed is accurate. If your credit report does contain incorrect information, it could be having a significant impact on your overall credit score. You’re entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit agencies by visiting www.annualcreditreport.com. Checking your own credit reports won’t affect your credit scores.
By cross-referencing your credit report against bank statements and other financial documents, you may be able to spot inaccuracies on your credit report. In that case, you can contact the credit provider or the credit reporting body and ask them to amend your report. This could definitely help you boost your credit score.
If you’re interested in knowing more about credit scores, speak to the expert Geelong Mortgage Brokers at The Hrkac Group. when it comes to obtaining a home loan or business loan – whether it’s to purchase a home or refinance/consolidate your debts or purchase assets – the Geelong based brokerage team is there to help you with practical, effective financial advice.
We listen, we understand and we know what the best solution for your particular needs is. Our honest, knowledgeable Geelong Mortgage Brokers will give you the confidence to negotiate for your future so together, we can develop and maintain your wealth. Make an appointment today via contact us, or phone (03) 5221 2355.
If you want to break into the Geelong property market, you’ll likely find yourself in the market for a home loan. When searching for the ideal home loan for your needs, you have a few options available. You can do it yourself and visit the big four banks and various lenders in the hopes of discovering a deal that’s right for you. Or, you can engage the services of a local Geelong Mortgage Broker, who will do all of the groundwork for you.
To help you make a decision, we’ve created a list of 5 areas to compare the services of a Mortgage Broker against what you get from a bank.
1. Customer experience
When you visit a bank, you will only have their specific home loan options to choose from. They will explain their available products and recommend the one that most suits your needs. You will need to go through this process of talking through your options with multiple banks to make sure you are getting the best deal. If you decide on a home loan, the bank may put you in touch with a Lending Specialist to assist you with filling out your application.
When you choose to go through a Mortgage Broker, they will guide you through the entire process, start to finish. They can show you various options from lots of different banks and lenders, helping you compare rates, features and fees, all in one meeting. Your Mortgage Broker will ultimately connect you with a bank or non-bank mortgage lender and will be there to advise you through the application process.
2. Deal options
Banks can only offer you their own range of home loan products. The big four may have the largest range, with loans to suit most types of borrower, while smaller banks may have fewer options.
A Mortgage Broker has access to hundreds of loan products via their lending panel. This is a selection of 20-30 lenders, sometimes more, that the Mortgage Broker regularly does business with. They know all the ins and outs of each of these home loan products and can recommend the perfect one for you.
3. Advantages
Many banks, particularly the big four, have a large selection of home loan products. And they might employ Lending Specialists who can provide advice similar to a Mortgage Broker. But only for the range of home loans they offer. Banks can also offer you package deals on other financial products, like credit cards and savings accounts. But these bells & whistles may distract you from the prospect of a better deal out there for you.
With a Mortgage Broker, you receive knowledgeable advice and guidance from a professional who has tabs on a wide range of home loan offers. They can instantly compare rates from their full panel of lenders and assist you through the application process. They work for you and their service is usually free.
4. Disadvantages
Banks can only offer the limited home loan options they have available. They want you to sign up with them and understandably won’t tell you that there’s a similar or better product available somewhere else. They can’t offer independent advice and guidance.
With a Mortgage Broker, you will need to go through the application process twice; once with the Broker and once with the Lender, though they will guide you through both. And although their selection is much wider than a bank, a Mortgage Broker is limited to the lenders on their panel. It is also worth mentioning that while a Mortgage Broker works for you, their payment comes in the form of a commission from the lender you choose via their service.
5. Commissions and fees
Banks will typically charge an application or settlement fee, plus several other fees. Some banks charge more fees than others, and certain home loan products may have more fees than others available from the same bank.
Mortgage Brokers receive payment for their services through a commission from the lender you end up signing with. The majority don’t charge extra fees, there is no extra cost to you.
A Mortgage Broker can act as an intermediary between you and the bank. They research the hundreds of available home loans on the market so you don’t have to. They work directly with you to support you through the application and settlement process, helping you gain a full understanding of the paperwork and terms & conditions before signing on the dotted line.
If you’re in the market for a home loan, talk to our honest, knowledgeable Geelong Mortgage Brokers. The Hrkac Group Geelong Mortgage Brokers work with a large variety of lenders, both bank and non-bank, so we are able to ensure you are working with loan products that have all the features you need at a rate that works for you. We will work alongside you to guide you through your home loan application.
Make an appointment today via contact us, or phone 03 5224 2366.
When selecting a mortgage broker for your home loan, it’s critical to protect your interests by choosing the right one for your needs. If this is your first home purchase, this may be foreign territory. A mortgage broker should be able to guide you through the process, help you choose the right loan to finance your home, and facilitate the whole process. However, it’s essential you do your due diligence before choosing a mortgage broker.
Below we outline five key things you should take into consideration.
1. What are your available options?
Taking out a home loan is a big commitment, no question. You aren’t just going to go with the first result on a google search. Taking into account your financial situation, you need to carefully consider your available options to determine the type of loan you will need.
- How big is your deposit? The size of your initial deposit determines the type of home loan and interest rates you can qualify for. If your deposit is less than 20% of the purchase price of your prospective home, you will also have to pay Lender’s Mortgage Insurance.
- What loan features do you need? Do you require an offset account, extra repayments, or a redraw facility? Features such as these may save you money and provide flexibility.
- Fixed or variable interest rate? A fixed-rate home loan means your repayments will be the same for a set period; usually up to 5 years. This may help you with budgeting or save you from potential interest rises. Alternatively, a variable rate home loan is subject to the current interest rates in the market.
- Can you afford the monthly repayments? Take stock of your monthly finances. Go over all of your incomings and outgoings and be realistic about what you can afford.
2. Have you researched your broker?
Ask your mortgage broker about their qualifications and experience. Ideally, they will have many years of experience and a portfolio of satisfied customers. Make sure they are licensed to provide you with a loan. They should have their own Australian Credit Licence or be qualified to act as an authorised Credit Representative, as required by the Australian Securities and Investments Commission (ASIC). Some other accreditations to look out for include:
- Have a Certificate IV in Finance and Mortgage Broking
- Accredited under the National Consumer Protection Act
- A member of the Mortgage & Finance Association of Australia (MFAA) and/or the Finance Brokers Association of Australia (FBAA)
If any of your family or friends have recently gone through this process with a broker, you should ask them about their experience. Were they happy with their broker? What they would do differently next time? What are some things they would look for in their next broker?
3. Who is on your broker’s lending panel?
Brokers are restricted by a list of banks they can access loans from, this is known as their “lender panel”. A good broker will have a range of lenders on their panel and regularly engage the services of the full range, depending on the borrower’s circumstances.
Check if the broker has a range of reputable institutions. If not, you may miss out on better deals. Make sure your broker can explain how many lenders they have on their panel, how many they use, and why.
4. What are the fees, charges & commissions?
A broker is required by law to clearly explain and demonstrate how they are remunerated. Most brokers receive a percentage-based commission for their work, paid by the bank that is providing the loan. There is no cost to you.
5. Do you have a list of questions ready to go?
It’s always a good idea to have a list of questions for your broker handy to help you make your decision. Here’s a list to help you get started:
- What is your ownership structure? Ask your broker who owns them. Some are owned or part-owned by banks. Research shows that broker companies owned by big banks send more loans back to their parent company. A good broker won’t be influenced by their ownership structure and will recommend a wide range of loans from across the market.
- Can you provide a credit assessment? A broker is legally obliged to follow responsible lending laws and should never sell you an inappropriate loan. They must assess your income and expenses along with your financial objectives and expectations. This is all contained in a document called a credit assessment.
- Can you supply me with a credit guide? A broker is legally required to provide you with a credit guide. It encompasses the broker’s contact details and a record of the commission the broker will receive if you go ahead with the loan.
- How many lenders are on your panel? This will let you know how many loans a broker can look at for you – some have lots of options but others offer a surprisingly limited selection.
If a broker can’t answer basic questions about charges, commissions, and ownership structures, this could be a warning sign. A good broker should always be transparent about their business and services.
When it comes to obtaining a home loan the Geelong-based brokerage team at the Hrkac Group is there to help you with practical, effective financial advice.
We will help you find the best home loan solution for your particular needs. Our honest, knowledgeable mortgage brokers will give you the confidence to negotiate for your future so together, we can develop and maintain your wealth.
Make an appointment today via contact us, or phone 03 5224 2366.
First Home Loan Deposit Scheme
Purchasing your first home is a mix of making a daunting life decision and overwhelming excitement all at once. Even though you’re locking yourself in for a significant debt for the first time and you might be doubting your saving ability, there are many support systems in place to make the process of buying your first home easier.
The First Home Loan Deposit Scheme is a new initiative by the Australian Government and the National Housing Finances and Investment Corporation (NHIFC), where the Government will guarantee support for a percentage of your deposit.
Generally, you need to save a minimum of 20% of a home’s value as a deposit to avoid paying extra insurance and bank fees on your first home loan. Referred to as Lenders Mortgage Insurance, you’re basically paying the bank a fee to cover you for the amount you fall short on your deposit. With the new Deposit Scheme, the minimum deposit you’re required to pay, to avoid extra fees, is just 5%. If you can put forward 5% of your new home’s value, the Government and NHIFC will provide a guarantee to your bank for the remaining 15% (maximum).
This is not a cash payment or a deposit for your house, and there are no costs involved. What you get is support in the form of a guarantee from the Government to your bank, that you will be responsible for meeting all costs and repayments over the life of the loan. What’s even better, is this Scheme can be used in conjunction with other initiatives like the First Homeowners Grant (which exempts you from paying stamp duty on your first home).
As expected, there are rules for eligibility, which are outlined in great detail here. Some of them are:
- It must be your first home purchase
- You must be 18 years of age and an Australian Citizen
- You must be either single or in a de facto/married relationship
- You must earn under a certain amount ($125,000 for singles / combined $200,000 for couples)
- It must be your primary residence (investment properties are not covered)
- The property price must be under the price cap for its location (more information here).
- It must be a principle and interest loan
If you can tick off all of these criteria, then you are eligible to apply for a place in the scheme but be quick because there are limited places available in this financial year. The Deposit Scheme is only offered in partnership with certain lenders though, so it’s best to talk to your lending specialist to reserve your position in the Scheme before they run out. There will be more places released after July 2020.
Get in touch with Paul Duncan, Geelong’s Lending Specialist to talk about securing your place in the First Home Loan Deposit Scheme today. Contact us to make an appointment, or phone 03 5224 2366.
Information is intended to be of a general nature only and any advice has been prepared without taking into account any person’s particular objectives, financial situation or needs</em
The idea of purchasing a property is daunting enough whether it is your first home or another addition to your investment portfolio. Add in the idea of the mountain of paperwork that goes along with obtaining a home loan and it may seem impossible!
The paperwork lenders require can be significant, and it’s important to provide the correct documentation and completed checklists. Sending your home loan application with missing or incorrect documents can result in your loan application going back and forth without result or even derail the application altogether.
After evaluating the risk involved with repaying a loan, lenders will decide whether or not your application will move forward. While requirements may vary from lender to lender, there are some key criteria commonly used to assess the risk of a client.
Income
The first and foremost area your lender will look into is how much you earn, as well as how stable your earnings are. They want to make sure you can consistently make repayments to your loan and are maintaining continuous employment. Bank statements, payslips, group certificates, and tax returns are among the documents required to give evidence of your income.
Savings
Although the overall number in your bank account is taken into consideration, lenders look at whether you are capable of saving over the long term. A bank account statement showing regular deposits is an example of a required document. In the lead-up to applying for a home loan, think twice about buying your daily coffee or eating out multiple times a week. Instead, deposit this money into your savings account. It is not uncommon for applications to be rejected if a savings history is deemed not to be genuine, for example, if the majority of savings have been given as a gift.
Other income/assets
To better determine your financial situation, lenders want to see proof of your assets and liabilities, including savings, shareholdings, and motor vehicles or an additional form of income. The Hrkac Group team can advise you on the specific paperwork requirements, as each lender can differ.
Credit
In order to determine that you have been able to make any previous credit card repayments and bill payments, lenders will look at copies of credit card and personal loan statements. Keep in mind that it’s not only just your credit card, home loan, or personal loan repayments they’ll look at, but also any mobile phone and utility bills.
Buying a home is a big step in everyone’s lives and there are certainly many hoops to jump through along the way. The team of Mortgage Brokers at The Hrkac Group aims to make the process of gathering all the necessary paperwork and applying for a home loan as simple and stress-free as possible.
Call us today to arrange an appointment.
Today’s Home Loan market is a complex proposition for potential borrowers, from First Home Buyers through to experienced property investors. Engaging a Mortgage Broker to assist you can make all the difference in being able to find a suitable loan from a maze of lenders, with complex lending rules and regulations currently in place. Mortgage brokers can do all of the leg work for you, including checking your borrowing capacity and ensuring you meet the lending criteria, of dozens of lenders, and you choose who you want to deal with.
It is important to note that a Mortgage Broker is required to work in your best interests by law, and consumers have legal protection if a Broker doesn’t do so. Hrkac Group Mortgage Brokers don’t charge any fees to our clients. If we do our job properly and locate a suitable loan for our clients, the Lenders will pay a commission to us. The commission isn’t added to your loan amount or interest rate, so it is a completely free, ethical and professional service we provide.
Why use The Hrkac Group’s Mortgage Brokers
1) We’re thorough
We discuss and analyse your existing situation, your home loan needs and requirements, and obtain all necessary information pertaining to your home loan application.
2) We make it simple
We explain the types of home loans available to you from a range of banks and specialist finance companies. Such as:
- Home Loans
- Investment Home Loans
- Vehicle & Equipment Loans
- Small Business Loan
- Refinances
- Debt Consolidations
3) Specialised & personalised service
Based on the information provided by you, and utilising specialist home loan software, we match your home loan requirements to a selection of home loan products offered by our panel of lenders.
4) Overview of costs
We provide an overview of your ‘Purchase Budget’ incorporating the relevant costs associated with your home loan application in writing.
5) In-depth view of products
We provide an in-depth overview of the home loan product or products you select, in writing.
6) We do the tricky parts
We complete and package your home loan application and deliver it to the lender’s assessment team on your behalf.
7) We dot the i’s and cross the t’s
We act as an intermediary between you and the lender, negotiating the terms and conditions of your loan. We will also answer any questions the lender’s assessment team may have, on your behalf.
8) Communicate with all parties
We liaise with your solicitor, real estate agent accountant, and any other related parties to ensure a smooth and timely settlement.
9) Going the extra step
We assist with future home loan requirements, whether you wish to check, change, or top-up your loan, or renegotiate your current home loan interest rate with your existing lender.
10) Keeping you updated
We act as a valuable information service beyond the settlement of your loan by providing you with relevant information on the home loan market, updates on products, and special offers that may be of interest to you.
Take control of your financial future by meeting with the best Mortgage Brokers in Geelong at The Hrkac Group. Make an appointment today via Contact Us, or phone (03) 5224 2366.
