Want a property loan but have no credit record? Here’s what you can do…
Fsp Invest Team, 10 May. 2013
Around 50% of all loan applications are rejected because of problems with applicants’ credit records. And having no credit record is one of the reasons that banks can reject a property loan application. You see, in the credit world, no credit IS bad credit. If you have no credit history, you’re in the same boat as a person with bad credit. Read on to discover three methods you can use to build a good credit record so you can get a property loan approved.
Banks take certain factors into account before considering your home loan application.
And while they can actually decide to reject a property loan because of bad credit, they can also reject a loan because you have no credit record.
This may sound strange but, “banks believe that even when you have lots of money saved up, you need to have a debt record to show you can repay your debt,” says Francois Joubert in Become a Master Property Investor in 90 Days.
So your first step is to make sure you have a credit record.
Luckily, there are various things you can do to quickly build up a good credit record.
Use these three easy methods to go from having no credit record to a good credit record
Here’s what Joubert suggests you do…
1. Get a cellphone contract in your own name. A cell phone contract is one of the easiest ways to start building your credit record. So, “if you don’t have one in your name or you’re using prepaid, switch to a contract, even if it’s a prepaid contract,” says Joubert.
2. Use your credit card once in a while. Whether it’s a credit card with a bank or a credit card at a department store, you need to use one. Just be careful to not get yourself into debt. Rather, “use your credit card for R1,000 worth of purchases this month and pay that back in the next two months,” advises Joubert. The aim is to create a traceable record of you taking on debt and then repaying it on time.
3. Buy a car. This isn’t to suggest you must go and buy a car if you don’t need one, but if you’re planning to get a new car, get it financed. It’s an easy way to boost your credit record since requirements for car financing are lower than those for home loans.
There you have it. Putting these methods to use is your first step to building a good credit record and help you get a property loan approved.