Smartline Personal Mortgage Advisers is warning potential borrowers not to seek pre-approval or engage in credit enquiries if they’re not really serious about looking for a property, as lenders will deem them to be ‘shopping for credit’.
“Lenders use a complex process called credit scoring when assessing your application for finance,” Smartline’s State Manager NSW & ACT Michael Daniels said. “Over the past year or two we have seen lenders place increasing emphasis on using credit scoring when considering borrowers’ applications.
“While many elements are considered when determining a person’s credit score, numerous credit enquiries can considerably lower your credit score and damage your chances of securing a loan approval when you are ready.
“We have found that three or more credit enquiries will score poorly with most lenders, leading to automatic declines.
“Borrowers who receive decline notices will want to know how they can improve their credit score. While the exact formulas used are a tightly held secret, there are some basics that everyone can do to ensure they have the best credit score possible.
“This includes a few fundamentals such as making minimal credit enquiries and pre-approval applications, having a sound level of assets and maintaining a good length of employment or continuous employment.
“And, with every field of an application under such heavy scrutiny by the lenders’ systems, it’s important to seek the advice of an expert who is familiar with these requirements to ensure you have the best chance of securing finance.”
Updated 29 June 2012