Buyers need help to clean up credit records

News > news - 31 Jan 2011
Many entry-level buyers are losing out on the chance of home ownership because no-one has advised them how to clean up their credit records before applying for a bond.
So says Deon Lessing, owner of the Chas Everitt International franchise serving the Cape Western Seaboard, who notes: “There is huge demand for houses in the R350 000 to R800 000 price range in areas such as Table View/ Parklands, and we often get two and even three offers within days of such properties going on the market.
“But sale after sale falls through because the buyers’ home loan applications are being refused – and most often not because they don’t earn enough income to qualify, but because they have a few minor problems on their credit records that could easily have been resolved before they went house-hunting.”
Examples include black marks for a store account instalment unpaid because a bill went astray, a credit card instalment paid late because the borrower was on holiday and a cell phone account that fell into arears because the phone was stolen.
Chas Everitt CEO Berry Everitt says it is actually quite seldom that potential buyers can get as far as signing an offer to purchase while hiding really major debt problems or a string of judgments on their records.
“Unfortunately, though, small and seemingly insignificant infringements send up red flags on the banks’ automated credit scoring systems just the same as big ones, and that often leads to a home loan application being rejected.
“In addition, banks don’t like short credit histories, so potential homebuyers really need to work to reduce debt and pay all their bills in full and on time for at least six months - and preferably a year – before applying for a home loan.
“And in instances where they have had debt problems that are now resolved, they also need to ensure that their names have been removed from the default lists held by the credit bureaux.”
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