This video is part of an exclusive 10-part series from the book: How to get mortgage-free like me, available at www.nicolessmartmoney.com.au
If you think you’re ready to apply for a mortgage, Nicole Pedersen-McKinnon has news for you: check your credit score.
“Your credit score is like an intimate snapshot of your money self,” she says.
But new rules have meant that, unbeknownst to them, many Aussies’ credit scores have fallen overnight - and that score can make or break their chances of being approved for a loan.
“New rules mean that if you’re late by just 14 days with a credit repayment – think credit cards or other loans or finance – you’ll sink your score for two years.”
More from Nicole: How much money it takes to be a millionaire at every age
More from Nicole: The $150,346 rort your big bank doesn’t want you to know
More from Nicole: Three vital steps for borrowers to pass the new Netflix test
“And you’ll do the same for five years if you miss any other bill by 60 days – this counts as a far worse default. Your chances of getting a loan would go dramatically down.”
Here are Nicole’s tips to get your credit score ready:
Find out your score before the lender you want does
Get a free copy of your credit report
Don’t make credit mistakes
Don’t apply for any other form of credit in the lead up
While you’re doing your credit research, Pedersen-McKinnon says you should find out any “black marks” impacting your score.
“The best chance you have of a quick fix is finding a mistake,” she said. “You can correct this directly with credit agencies.”
And staying away from credit is important in the lead up to applying for a mortgage.
“Every single time you stick your hand up to borrow money, it pushes your credit score down.
“That includes if you simply, smartly, want to transfer credit card debt to a 0 per cent deal. Or even if just apply to extend your credit card limit, as you eye property ownership.
And one last tip: the larger the limit, the lower your credit score.
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.