Mortgage applicants mustn’t overlook their credit record


Mortgage applicants mustn't overlook their credit record

Credit card defaults or making only minimum repayments can lower credit rating

In Hong Kong, those looking to purchase property often rely on mortgage loans from banks. In addition to preparing sufficient down payment and proof of stable income, there is an important factor that should not be overlooked: personal credit record. When applying for a mortgage loan, banks not only consider the borrower's income and financial capacity, but also conduct credit record and score inquiries from credit data agencies.


According to the credit scoring system used by these agencies, the ratings range from A to J, with A representing a good credit record. If the borrower has defaulted on credit card or personal loans, or has only made minimum repayments for a long time, their credit rating may be lowered. If one's credit rating is lowered, the bank not only has the right to reject the mortgage loan application, but can also demand a higher interest rate to balance the loan risk. This means that borrowers would have to pay higher interest rates, resulting in increased loan costs.


Therefore, it is important to maintain a good personal credit record when applying for a mortgage loan. Avoiding defaults on credit cards or personal loans, and making timely repayments for existing loans is crucial. In addition, it is important to avoid excessive credit card or loan applications, as each application can have a negative impact on one's credit record.


Apart from clearing debts, there are other ways to maintain a good credit record. For instance, making timely repayments and avoiding late payments can prevent credit rating from declining. At the same time, minimizing credit card usage and avoiding only making minimum repayments can prevent negative impacts on credit rating.


In summary, do not overlook the impact of credit record when applying for a mortgage loan. Maintaining a good credit record is crucial for increasing the chances of successful application and can even bring more financial opportunities in the future.


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