For many, the process of buying a home is exciting. You are finally able to live your dream of owning your own space. However, it also comes with uncertainty as there is a chance that your application might get rejected. One of the biggest factors for banks to decide on whether to approve your financing application or not is your financial health and credit score.
What is a Credit Score?
A credit score measures your credit-worthiness and repayment capability. Different banks have different ways to calculate your score. It is important to have a healthy credit standing as it is a key indicator for banks to determine your ability to repay the financing.
Generally, there are several indicators that banks look at: Income, Debt and Behaviour.
a) Banks will look at your net income aka your monthly salary and cash flow, which includes your variable income e.g. overtime pay and bonus/incentives
b) To further improve your credit score, you should include documents from other source of incomes. For example:
- Taxes - It is an alternative confirmation of other source of income that is declared.
- Rental Income - Make sure you have a valid tenancy agreement and all payments are credited into bank accounts for validation.
- Savings that returns dividends such as from Fixed Deposit, Tabung Haji etc.
- Unit trusts, ASB.
In assessing your credit score, banks will also consider your existing debt and monthly commitments. Be sure to keep in mind PTPTN & other loan facilities that you have and make prompt payments!
a) Pay your bills on time – Why? Banks are extremely concerned about your repayment history especially if you have developed a habit of late payments. Be sure you know your payment due date to ensure all payments are made before it’s due to avoid any interest/late payment charges.
b) No credit history at all is not good – Banks view a lack of credit history as a negative attribute. Even if you are good with money/your finance, it doesn’t show on paper. At the very least, have one credit card and pay fully on the due date. It will help to show your previous spending and payment behaviour.
c) Check your record - You can print your own CCRIS record from BNM kiosk or obtain your e-CCRIS from BNM website for free to monitor your current status. You also can challenge your credit records at BNM/banks if you have found any discrepancies.
The trick is to be disciplined! If you’re interested to own a home and still unsure about whether your financing application will get approved or rejected, why not try our pre-assessment feature?
Visit www.maybank2own.com > click Am I Eligible > Fill in the details > Get to know how much you are eligible for a financing
Once you have found out, you can browse our selection of homes and apply! Interested for a home outside of our website? No worries, let us know and we’ll help you out.
Learn more about the benefits of a HouzKEY financing here.