When you’re looking to invest in a home loan as a potential borrower in New Zealand, professional lenders will thoroughly vet you to be sure that you will pay their money back according to the terms.
The first thing these lenders will check is your credit score.
A higher credit score demonstrates how good you are at repaying things, like credit cards, overdrafts and personal loans. The more missed payments you have, the lower your credit score, and the less likely lenders are to provide you with a mortgage.
Find out more about your credit score, and how it affects your mortgage eligibility in NZ, here:
How does a credit score work in New Zealand, and what affects it?
In New Zealand, credit scores range between zero and a thousand. These scores are formulated around a report compiled from credit cards, overdrafts, car loans, personal loans, utility payments, phone contracts and more that you’ve taken out over time. If you have a successful borrowing and repayment history – in that, you’ve borrowed a substantial amount of credit but have always repaid quickly – this will reflect positively on your credit score.
Late, missed and non-payments, including fines, negatively impact your credit score. Lenders will carefully comb through your history to look for indicators of credit risk, which may impact how much they will lend to you and at what interest rate.
What’s the minimum credit score needed for a home loan in New Zealand?
The minimum credit score needed for a home loan in New Zealand is between 500 to 700, although anything over 700 is guaranteed to get you accepted by a mortgage lender. Indeed, 500 to 700 is considered the national average.
If your credit score is below 300, it’s unlikely that you will qualify for a mortgage. If you do, you may be limited to borrowing only a small amount, and at a higher interest rate. Even so, you shouldn’t panic; there are many ways to boost your credit score and achieve your dream of home ownership.
How do I boost my credit score?
The following tips and tricks help to boost your credit score by demonstrating a lack of credit risk:
- Register to vote
- Have a stable residential address
- Make sure to pay bills on time (automatic payments can
- elp!)
- Consolidate your debts into lower-interest loans
- Get free credit reports and see what can be improved!
Looking for the best mortgage broker in the business? Simpler are the professionals for you. Throughout New Zealand, we offer free advice regarding your mortgage eligibility, and connect customers with the right home loan for them. We do the bank’s job for them, enabling us to access the lowest interest rates possible!
Wherever you’re located in NZ, contact the Simpler team for expert mortgage advice today.
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