A Fin24 user tried to buy a house last year, but her application was declined due to a low credit score. She wants to know how long it will take for her score to be positive so she can qualify for a bond. She writes:
I tried to make a deal to buy a house last year, but my scoring (credit score) was very low due to non-payment of my accounts at that time. I've settled some of my debts and I've been paying my debts diligently since then.
How long will it take before my name is cleared? Is there hope of me buying my own house (getting a bond) with my credit record? What can you advise?
Damon Sivitilli of DebtBusters advises:
Your scoring could be low due to the non-payment of those accounts as well as your amount of debt. Your accounts need to be up to date and you need to have the ability to afford the bond. (Affordability = net income – monthly debts – monthly living expenses.)
If you feel you have the ability, you need to make sure that all accounts are 100% up to date and you have been paying them for 3 to 6 months without fail. This will strengthen your credit score.
If the bank is still denying you the bond, you can ask them where exactly you are falling short so that you can try to improve in that regard.
It is understandable that the banks are sceptical due to the fact that you were experiencing problems last year with your debts and a bond will be your largest expense.
Yvonne Viljoen responds: ooba has partnered with Lucid to assist clients with poor payment profiles and listings.
What this entails is that, if the applicant had a judgment and, or adverse and this debt has been settled in line with the amnesty, Lucid can assist the client to have these removed from the client's credit profile.
Lucid can also advise the client on what their credit score is. Once confirmation has been received from all credit bureaus then I would suggest that you wait 3 to 6 months to allow your score to rectify itself and then make application.
However, if you are referring to slow payments however, i.e. an arrear payment profile which means that the accounts were paid late or under paid or not paid at all, then they would need to pay those accounts on time for a minimum of 12 to 24 months before making an application.
Alternatively, they may close the account and wait a minimum of 12 to 24 months from date of closure to re-apply. A poor payment profile is not removed off the client's profile for between 12 to 36 months and therefore can affect lending.
Notably, retail accounts, in the interest of borrowing don’t assist to grow a client’s score. Credit cards fare much better in growing one’s credit score.
ALSO READ: How to read your credit report
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