Obtaining credit in whatever form that maybe is no easy and quick process. A lot goes into it, from the bank or credit provider to the person applying for the credit. Do you qualify? What is the best type of credit for your financial position? In this article, we will dissect the basic credit application process for those who haven’t ever taken out credit with a credit provider.
Step One: Check your credit score
The biggest mistake people can make before they apply for credit is failing to know their credit score. In Australia, there are credit history providers. Credit scores are not provided by banks – which is often a misconception. Head to government websites to find out who the available credit history providers are to obtain your score prior to sending off a credit application. This way you will know what credit you can apply for, rather than doing it blindly.
Step Two: Apply for the right credit
It is crucial to know what credit you can get and qualify to get prior to applying. As mentioned, to avoid your credit score looking unfavorable, avoid applying for lots of different credit options in the hope of landing one. The more times a credit institution investigates your credit score, the worse it reflects. Do not ask me why it is just the way it is. Ensure you know your limits. How much can you realistically spend per month in comparison to what you earn?
If you are applying for a home loan, the same principles apply. Know what you can afford and do not go overboard. Talk to your potential lender to understand what works for you. Check your credit score, know how much money you have for the deposit, and if you qualify for any government grants. Banks like Newcastle Permanent are very accommodating for first home buyers. Find them here.
Step Three: Follow instructions
It is important to follow the application instructions closely. Upload the correct documents and do it in a prompt fashion. Credit providers do not take kindly to potential customers showing early that they may not be trustworthy. Listen to what credit providers say about repayments. Set them up correctly to avoid paying interest. And most of all – enjoy your new credit whatever it may be.
If you are obtaining a credit card to bank QANTAS points or obtaining a credit card to finance a holiday (hopefully not), ensure you abide by the instructions about when you begin the process. It is important to have a solid credit history as you move through life and even more important to have a credit provider you can trust (like Newcastle Permanent) so do not mess it up early!