How is it possible to pay off your home loan quickly for better credit rating? There are ways for you to get refinancing on your home loan at a much lower rate but higher monthly payments. It really is much easier than it sounds; allow us to uncomplicate it for you.
Credit rating is an assessment by loan companies, the result of which determines the risks involved in giving you their services. The better your credit score, the more likely you will be granted credit and the better the terms you are likely to be offered for a loan or credit account.
Home Loan and Credit Rating
How does paying my home loan affect my credit rating? Well, it is not about just the home loan but by the act of paying on time and even ahead of schedule. Because your timely payment is part of your credit history, it reflects how reliable you are in the financial world. By paying your home loan it presents an image of being trustworthy to the credit card companies, the opposite thing will happen if you are prone to late payments. Presenting an image of unreliability not only prolongs your payment period but it also affects your current loan and future loans.
There are many reasons why Australians fall behind on their debt. The constant is its effect on your interest rates. Why? Interest rates might rise and fall depending on the current market situation. If you are a good payer you are not affected but if you have bad credit rating then that puts you at a disadvantage. Although it’s difficult to predict what will happen to interest rates, the current interest rates appear to be at an all time low and can even fall further for an extended period. The recent fall in three-year fixed interest rates to around 4 per cent supports this view. The more important point is that whether the interest rates rise or fall, by far the most rewarding and effective strategy are to quickly pay off your home loan. Doing so will help you get a better credit rating and in the near future re-finance your loan at a much lower interest, allowing you to pay off the loan at a shorter period of time and increase your credit score. Each year you can shop around for a better loan, this means lower interest and shorter repayment time. If you find something be sure to present the idea to your current lender and ask if they can match the offer.