credit report

How your online info can scare banks away

AdobeStock_102029688 copy.jpg

We might be connected better than ever thanks to the Internet, but this excess of information isn’t all good news when it comes to finance and property.

 

A quick Google of myself and my home address discovered this about me:

  • Where I last went on holiday
  • The companies of which I am a shareholder and director of
  • My last marathon time
  • A lot about my business and who I work with
  • An estimate of what my house would rent for
  • That I write lots of awesome blog posts(!?)
  • A YouTube video of me
  • A bunch of work photos
  • My estimated house value
  • My neighbour’s estimated house value
  • My credit score

 

There is some helpful stuff here, but also some stark finance-related privacy concerns. Here are a few thoughts …

 

Credit scores

In business and when it comes to trying to get a mortgage or secure credit of any kind (from getting a power account, to renting a home or getting a couch on HP) your credit score matters. Your credit score is something to take seriously and protect carefully. 

 

Here’s my advice: Pay now and argue it later. A clean credit score matters more than a $100 phone bill or gym membership dispute. Furthermore, companies are now reporting to credit agencies if you pay your bills on time. So, if you are considering applying for credit, be sure to keep those bill payments rolling through on time.

 

Where I went on holiday

Mental note, change my privacy settings on Facebook.

 

What my house will sell for

In my work, I deal with lots of real estate agents and from them I have heard some of the dangers of relying on estimates of house prices/values. 

 

Although it is kind of fun to know what your (or your neighbour’s house) is worth, it is a pretty broad estimate, based on comparable sales, that a computer algorithm works out. It is pretty clever, but of course it hasn’t viewed the condition of your property or your neighbour’s or the state of comparable sales or the way your place soaks up the sun or grows mould and so on and so on.

 

These “smart predictors” can lead to false expectations by all parties (buyers and sellers of property), so do take these figures with a grain of salt. And I would make the same comments about the newly launched online rental appraisals that are now popping up.

 

If I can find out the above about me, so can you … and all my clients, colleagues, family and friends. An awesome opportunity and a sobering thought.

 

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

 

 

3 Steps to Happier Mortgage Applications

 Our days are spent helping our clients either move to a more suitable bank for them or finding the best bank for their new home purchase.

 There are a couple of tips that we’d like to share this month on how to make the mortgage application process much easier.

 

  1. Order your own credit report.  It is free to order your credit report.  It takes approximately 10 days to receive it in the mail or to your email box, however, it’s a very useful bit of information to see how your credit rating is.  We’ve found the best website to start with is here: https://www.govt.nz/browse/consumer-rights-and-complaints/debt-and-credit-records/check-your-own-credit-report/.  You can order your own credit reports or you can set your credit report to turn up automatically every month for a low monthly payment at http://mycreditfile.co.nz. When you come to see us, bring that credit report and we’ll include that as part of the application.  The banks love it when we give them all the information up front! 
  2. Prepare a budget.  The most important thing is to show to the bank how much you earn, how much you spend and, with the remaining amount of money that you have in the month, how much you can afford on the mortgage.  There are a couple of different types of budgets – some just break down your expenses into different categories. We have a version that allows you to break down how much you think you spend and then compare it to last months bank statement.  You can therefore see where the really big spending is occurring.  If you want a copy of our budget sheet, we’re happy to send it out to you.  Please email us to ask us for a copyof the Excel spreadsheet.
  3. Payslips and Financials. If you’re self-employed, we’ll need your most recent financials for your business.  Often, self-employed people haven’t got there financials completed yet.  If it’s past September, then we’ll need the most recent March financials for you.  This bit is unavoidable because the bank needs to know how much you’ve been earning recently. 

If you’re an employee, we’ll need at least 3 recent payslips to get your mortgage underway.  Some payslips are difficult to obtain and you need to request them from your HR departments.  This may take a couple of days, so getting this early makes the process a lot easier.

 

Bonus Tip:  If this is your first home purchase, organising your KiwiSaverwithdrawal early makes the process significantly easier.  It can take between 2-4 weeks to process you KiwiSaver withdrawal form so the earlier you do it, the better.  Here’s a link to the application form: http://www.hnzc.co.nz/about-us/Forms-and-applications/Kiwisaver-application-form/Kiwisaver-application-form

 

If you’ve got any more questions about getting ready for your mortgage application, you’re always free to call one of our advisers.

 

Rupert Gough is an Authorised Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.