Pay bills on time to get a better home loan

Pay Bills on Time to Get a Better Home Loan

Mark Stevenson, Managing Director at Bell Partners Finance (now Evolve Lending & Finance) wrote for The Western Weekender to help readers understand how credit reporting actually works and why paying bills on time has become more important than ever when applying for a home loan.

Prior to July 2018, Australia’s credit reporting system only captured negative information. Late payments and defaults were recorded, but on-time payments were not. That changed with the introduction of Comprehensive Credit Reporting, which requires major banks to share positive repayment data with credit reporting agencies. As a result, a borrower’s credit file now reflects the full picture of their conduct over the past two years, including monthly repayment scores that show whether payments were made on time or how far overdue they were.

The scoring system runs from “O” for on-time payments through to a score of 6 for accounts more than 150 days overdue. A 14-day grace period applies before a late payment is formally recorded, but lenders assessing applications generally want to see a clean, consistent repayment history with zero tolerance for recent late payments.

Mark also noted the opportunity at the time for borrowers with larger loans to explore fixed rates, with some fixed-rate products starting with a 2 for terms of up to five years. His point was timely: historically, the window to lock in a low fixed rate tends to close quickly once variable rates begin to look like they are turning.

Borrowers who understand their credit profile and manage their repayment conduct carefully are in a far stronger position when it comes to securing a competitive home loan.

Want to know where you stand and what options are available to you? Contact Evolve Lending & Finance for a clear, honest assessment.