Can a loan application affect my credit score? Let’s find out! Many Aussies are stressed by the thought of having a low credit score or having to use financial services that affect their score.
What Is a Credit Score?
It’s a number calculated using the information from your credit report. In other words, if you pay your debts and bills on time, you will have a good high score. If you don’t, you will have a low score reflecting that. The low score can make it harder for someone to get a loan or to use certain financial services.
How Can a Loan Application Affect My Credit Score?
The answer is yes. A loan, credit enquiries, too much debt, not paying the bills on time and not fixing the errors in your report all impact your credit score.
Usually, when you want to take a loan, a good score will inform the lender that you have the resources to pay your debt on time. When you apply for a loan, your credit score will drop with a couple of points. This might not seem much, but add all the other factors from above, and you will see why people worry about their score dropping.
So, if you apply for a loan, your credit score will be reduced. If you request a loan and get rejected, your rating will also be affected.
All type of credit enquiries that have to do with getting a loan will affect your credit score.
What Can You Do to Avoid Getting a Low Credit Score?
You can avoid getting a low credit score, but you can’t avoid getting your score lowered for each enquiry or credit process. That’s why it is advisable to apply for secure loans; the ones for which you can be sure that you won’t get rejected.
A better question would be how can I make my credit score count?
And for that, you will need to have a positive rating by paying your debts on time.
Another thing you can do is to find the best lender that can offer you a loan. We’re talking about a lender that won’t reject your request.
Try your best not to make too many enquiries because that can mean that you are struggling to pay your debts and you are desperate for a loan. Multiple applications don’t just lower your credit score. They will also make your lender reject your request and lower your rating even more. It’s a dangerous combination, and it will eventually lead to a problematic situation.
A good thing to keep in mind is if you pay your debts and pay them on time, you can get some credit score back, and your borrowing power will be increased.
So, don’t make too many applications, pay you debts, and remember that every type of loan (mortgage, auto, personal, business) can affect your credit score. Eventually, this will make the lender reject your request for a loan.
If you need a loan fast and are worried about having a negative mark on your credit file, enquire with NSW Mortgage Corp today! There is no impact on your credit score when filling out our form and we offer free consultation and assessment!
