Paying home loans irregularly can damage credit history
Many borrowers do not realize that irregular payments on their home loans can give them bad credit history.
Sometimes paying your home loan 1 day late because your loan repayment was set up to occur one day before your salary, can result in home loan providers declining your refinance application. Even if your home loan is in order, you are simply making payments a day or two late every month, will make it difficult if you apply for debt consolidation or a car loan with your mortgage provider.
Bad credit history will prevent borrowers from accessing unsecured loans and may create difficulties when going for a mortgage refinance.
“As a result of the GFC, all lenders considerably tightened up their lending criteria with a much greater emphasis on the credit worthiness of applicants. In this environment, you really can’t have a clean enough credit history for the lenders and any suggestion that a person can’t meet their debt repayments on time is a red flag, he commented.
The problem is even more serious if you wish to borrow more than 80% of your home value and need to obtain mortgage insurer approval.
Mortgage insurers won’t even consider an applicant with any sign of home loan arrears.
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