Score well and the house may be yours.
Category Property Finance
The majority of South Africans require financing to buy a home. All banks will look at you as an individual before providing the financing you need to buy a house.
A good credit profile is the first step. You can check your credit profile once a year for free as per the National Credit Act. It will detail any credit agreements you have with approved financial service providers. It also details your frequency of payment; any missed payments; overdue accounts; and if you've ever had a judgement against you. It is vital to pay bills on time, every time. An attitude of 'they can wait' towards your creditors may mean you will have to wait for the home of your dreams. Check your credit profile a few months before you apply for financing to ensure that what is reflected on your report is accurate, giving you time to correct any inaccuracies with the relevant institutions.
Banks also work on a credit score, which is calculated using your credit report, and financial history. How timely payments were made and were payments made in full on all credit accounts in your name? They will also not necessarily score you badly if you have accounts with a balance owing, as long as you are not over-indebted, as this will lower your credit score, and make any bank hesitant to provide a home loan.
Suddenly opening a bunch of accounts in order to create a credit profile will actually create a negative effect on a credit score, as banks look at the longevity of your credit profile and the health thereof. Credit cards should also not be maxed out as this shows either poor financial discipline or over-indebtedness and will reduce your credit score further. Pay your credit cards off steadily, and when they are paid off, do not close these accounts, as their payment history adds positively to your credit score, as does the fact that you qualify for credit. How well you paid off instalment loans will also add to your score as it shows good financial management on your part.
If it's not obvious by now, maintaining good payment habits, and not being over-indebted, is a status you always want to maintain, as it is a golden ticket to qualifying for a home loan when you need it.
Author: fnb.co.za
