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The decision to buy a house is monumental. Not only is it an expensive process but one which is fraught with multiple challenges. For one, if your credit standing isn’t great, your mortgage application may be rejected.
However, with care and good planning, you can make yourself loan-worthy in no time. Here are our top 5 tips for converting your credit standing from good to great:
- Get the inaccuracies on your credit report fixed
Your credit report is a summary of your entire credit history, which indicates your spending habits and earning potential and informs the lender whether you are a safe investment or not.Sometimes, due to some technical errors in data input or calculation, you may have some inaccuracies in your credit report. Your earnings may not have been updated or your expenses may have been exaggerated by mistake. When lenders see such poor numbers, they are less likely to lend you money.It’s best to have your credit report reviewed by experts and have these errors corrected.
- Cut down on the number of cards
The more number of Debit/Credit cards you have, the more likely you are to use them and rake up debts. Paying off your card debts immediately is one great way of maintaining a good credit. Another is to cut out the cards entirely.When there is less temptation, you have a greater chance to save. Choose to have one card, instead of say, 3.
- Pay your bills and EMIs on schedule
Lenders want to be reassured that you’ll pay back the loan in due time. This is where a steady repayment cycle will help. Make sure you pay your monthly bills before the last date of payment and never miss the payment of an EMI.
- Keep a low O/D balance
Just like cards, a large overdraft balance is a dangerous temptation. Our first recommendation is that you avoid getting a large O/D balance approved by reducing your spending. However, if you already have a large O/D account, then try not to tap into it.Remember, O/D is an indication that you’re spending more than you can afford; which looks terrible on your credit report.
- Avoid making big purchases
Ideally, it’s best to avoid making big purchases like vehicles, television sets, and foreign trips at least a year before you purchase the property. This will not only help you save money but it’ll also help you avoid unwanted loans and expenses from accumulating.Large savings and limited expenses are the best to make your credit absolutely perfect.Total Mortgages offer home loans at highly-attractive interest rates. Get in touch with one of Total Mortgage’s mortgage brokers, who would take a look at your credit report and advice you on the best way to proceed.