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03 Oct 2011

First-Time Home Buyers Urged To Check Credit Report

Home Loans No Comments

Adv Kate Thambiran @ Lucid Living

First-time home buyers have been warned that errors on their credit report could stop them securing a home loan.
Equifax credit bureau said first-time home buyers need to be aware of the information credit bureaus hold on their credit report, before making an application for a home loan.

Research carried out by the company found that one in three consumers who applied for a credit card over the past 12 month were declined, but had no idea why their application was rejected. The majority did not bother to interrogate the reasons.

Equifax fear the same fate may await first-time home buyers looking to take advantage of the slew of more affordable homes that have come onto the market over the past few months.

“Of all our cases last year, 70% of consumers contacted the Credit Ombud office for assistance after their credit application had been rejected due to a negative listing (blacklisting) on their credit report,” said Manie van Schalkwyk in a statement. “To avoid disappointment, it’s imperative for consumers to ensure the credit information held with credit bureaus is correct, prior to applying for credit.”

Correcting simple mistakes or omissions on your credit report can make the difference between being accepted for an affordable home loan or being forced to take out a more expensive loan.

Neil Munroe, external affairs director at Equifax, said: “It’s vital first time home buyers understand what information is used by banks to assess their creditworthiness, as well as how they can make sure their credit rating is at its best for them to get the most favourable deal.”

Something as simple as the fact that they never received notice to pay a R200 doctor’s bill could result in a blacklisting and hamper the individual’s ability to have their home loan application approved. Or it might be that a credit agreement they had forgotten about is showing as having an outstanding balance which could lower their credit score.

“We recommend first time home buyers check their credit report before they start applying for home loans. Get your Credit Report now from Lucid Living. And if their application is declined, they should stop applying and ask the lender what factor is disqualifying their application.”

“In our recent survey, over 50% of those who were refused a new credit card simply gave up applying – yet if they had checked their credit report they may have found errors that could have been corrected or identified what was lowering their credit score, so they could do something to improve it and their chances in the future.”

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