That Home Loan Hub
Welcome to That Home Loan Hub, your ultimate guide to mastering the world of home loans and property. I'm Zebunisso Alimova, here to simplify the complexities of real estate and provide you with expert insights and the latest trends.
Whether you're a first-time homebuyer, an experienced investor, or simply curious about the property market, this podcast is for you. Join me each week as we unlock the secrets to property success and help you make informed decisions. Let's dive into the world of property together!
That Home Loan Hub
Khounch Cares Ep #3 - Credit Scores Explained: Your Path to Home Ownership
Are you aware of the crucial role credit scores play in securing your dream home? In our latest episode, we discuss everything you need to know about credit scores, including how they are calculated and what lenders truly look at while evaluating these numbers. With a credit score being a fundamental aspect of the home-buying process in New Zealand, understanding its nuances could mean the difference between approval and rejection for your loan application.
We dive deep into the different ranges of credit scores and emphasize the importance of knowing yours. By checking your score through trusted agencies like Centrix, Equifax, or Illion, you can empower yourself with knowledge essential for navigating the lending landscape. Our hosts share personal insights and stories, including how many banks view credit scores within the context of your overall financial situation. Even if your credit score isn't where you wish it to be, there are always steps you can take to improve it!
Throughout the conversation, we highlight tangible tips for enhancing your credit score—everything from ensuring timely bill payments to reducing existing debts. We also discuss how even those with defaults on their credit history can still find pathways to secure a mortgage. Listening to this episode will equip you with the necessary strategies and confidence to take control of your credit situation successfully.
Feel free to reach out for tailored advice from your mortgage advisor, as they can guide you through your specific circumstances. Don't forget, the journey toward homeownership might feel daunting, but with the right insights and support, it is achievable. Join our conversation! Subscribe, share, and let us know your thoughts!
Hello and welcome to another episode of Kunchi Ikea's. Hello, kunch, kia ora, everyone, so good to have you today. Today we are going to dive into a topic that affects nearly every Kiwi looking to buy a home or get a loan or even sign up for utilities. Drum roll, please Credit scores. Yay, look guys. Your credit score is very important and it can make or break your chances of getting approved for a mortgage. But how does it actually work, and what do the lenders look at when they look at your credit score, and how can you improve it? So we'll cover it all today and let's get into it. So, conch, do you want to tell us what's a credit score?
Speaker 2:Well, your credit score is a number that ranges from 1 to 1,000 or 1,200, depending on the credit companies.
Speaker 1:Cool, and where can I go to look it up?
Speaker 2:Well, there's actually a couple of agencies in New Zealand that you can look up, and it's all free and you can do it online, and that's through Centrix, equifax and Illion.
Speaker 1:Nice. And the higher score means lower risk for lenders and it makes it easier to get a loan. So, guys, if you haven't checked your credit score, now is the time to go and get it sorted. But how do lenders use the credit score? What are they actually looking at?
Speaker 2:So lenders actually use it when deciding whether to lend you money. So lenders look at the credit score, they look at your income, they look at your expenses and existing debt. All that matters. Bankers prefer a certain number or lenders prefer a certain score. So our most popular is lucky number 700.
Speaker 1:So if my credit score is above 700, my chances of getting approved are much higher if my score was like 300. Yeah, but that doesn't mean Can I still get a mortgage at 300? Absolutely.
Speaker 2:Yeah, absolutely. If it's 300 or lower than that, there is still a chance to get lending approved. It's just a little bit more challenging, but I actually personally have seen applications that have been approved with challenging credit scores. So if you've had any defaults or anything like that, it doesn't mean that you would get rejected.
Speaker 1:Absolutely, and you've seen it in the last few months of being on this side of the world Definitely that we actually can help people with some defaults. I mean, everyone makes mistakes in life, right, and it's how you come out of it. So burying your head in the sand is not an answer. Yes, correct, you've got to get ahead and do something about your life.
Speaker 2:Correct, yeah, and improve it, as long as you can evidence that you've improved it or you've paid those defaults. We just need to understand how you got into it, how you got out of it, and then we can explain that to the lenders on your behalf.
Speaker 1:Yeah, and what are you doing to improve it? So a couple of things that I would suggest for you guys today as a tip. Now, remember this is not a financial advice. This is just us sharing some tips, as pay bills on time Seriously like phone bills, utilities it's all now reflected on your credit scores.
Speaker 2:Yeah, it's definitely so. Set up direct debits. If you forget, set it up to come out of your account automatically. All those utility companies allow you to set up direct debits.
Speaker 1:But make sure you have money in that account so it doesn't bounce off.
Speaker 2:Make sure there's funds in the account at the same time.
Speaker 1:Yes, because it will affect your credit score and also what we say to people is when we do your loan application we try to go just to one or two lenders. We try to avoid going to multiple lenders because the more inquiries are there on your credit check, the less your score gets with each inquiry.
Speaker 2:Yes, it does affect your credit score with the numbers of inquiries.
Speaker 1:Hey Conch, how about we give them some tips about how they can prepare themselves for a mortgage or a loan when it comes to their chances of getting approved?
Speaker 2:Yeah, so obviously, get a copy of your credit check which you can get online For free. For free, If there is anything on there, fix it. So if or if there's an error on there, get them to fix it as well. So what we've seen as well is there are credit checks that are showing errors on some people's credit check. So you get that one fixed. Reduce the existing debts that you have as well.
Speaker 1:And also consider non-bank options. Guys, if you have a default on your credit check, it's not the end of the world. Those defaults do drop off after five years of you know, once you've paid it off, so we can take you back to the bank after showing that you can pay off your mortgage on time yeah, and the final tip is obviously talk it.
Speaker 2:Talk to your mortgage advisor for some advice, some more tailored advice, some more tailored advice. Exactly Talk to your mortgage advisor for some more tailored advice.
Speaker 1:Love it. Hey, I actually wanted to share something really funny with you. Not funny now, funny now Wasn't funny back then. But I had this client come to me and this was the first time ever I saw a credit check that had minus $999. Wow, it wasn't funny for her because actually she wasn't the one that did it.
Speaker 1:Yeah, she had someone that stole her identity, yes, and went out and racked up all sorts of bills. She never had a single bill in her life in terms of you know, like a personal loan or a car loan or a credit card. So she had no idea what was going on until she got a new job and she started seeing student loan repayments and she was like what? I don't even have a student loan. So she rang IRD and then she found out that someone stole her identity and got a student loan. I mean, how cool is that? They wanted to study, so that's cool. But this is how she discovered. And then she made a few inquiries and then she realized that they racked up so much debt under her name. It was crazy.
Speaker 2:And that happens. People steal their identity. For example, I've seen it happen to a family member their passport got stolen while it was getting delivered and somebody signed up for a phone account you know, got themselves a brand new phone and stuff, but then there's a default on the credit check of that person.
Speaker 1:And she spent months working it out with police and IRD and all the other places. But the good news was for them. I actually got them into a house and I explained all of that to the bank and the bank was happy to accept it. And, yeah, we got her into a home, but she was terrified. Before she came to me. She thought this is it. Her chances were over. Even though she didn't do that, she thought somehow her chances of being a homeowner were absolutely done.
Speaker 2:Yeah, which is why we recommend you know, if there's any errors or anything, just speak to your advisor and we can point you in the right direction of what to do next.
Speaker 1:Awesome guys, don't forget to subscribe to our channel, share the news and leave us some comments so we can address the topics that are hot to you, and you can also find us on Facebook, instagram and YouTube. Thank you and have a lovely day. Thank you.