How to get a home loan if you’re blacklisted

Article summary

• Applying for a home loan but worried about bad debt? SA home loan comparison service, ooba home loans, can assist.
• It is possible to secure a home loan if you have a not-so-perfect credit record, but that depends on how poor your credit score is.
• The important thing is to make those repayments on time, every month, and with the correct amount even after your bond has been approved.

Struggling to get a home loan because you have a bad credit score? SA’s largest home loan comparison service, ooba home loans, can advise prospective homeowners on improving their credit score so that they can apply for a bond and purchase a home.

Vivienne Cox, Regional Sales Manager at ooba home loans, says, “Things remain tough out there and a lot of people really need help. We are geared to help our customers who have had their bond applications rejected because of bad debts.”

Tips for improving your credit score

People applying for bonds with bad debt records fear that no bank in South Africa will be willing to grant them a bond, but they need to understand that bad debt is not a life sentence, notes Cox.

“ooba home loan’s role, where there is bad credit, is an advisory one – coaching clients on how to improve their record if they want to apply for a loan later on,” says Cox. “We make suggestions on which behaviours impact on their score, which is determined by account payment history, debt level, how long your accounts have been open, how often you apply for credit and things like bankruptcies and judgments that indicate poor servicing of debt.”

Here are some tips for improving your credit score:

1. Check for fraudulent activity

If the reason given for the rejection of a home loan application is a bad credit record, and the customer disagrees with that decision, they should investigate that record to make sure that there has been no fraudulent activity against their name. They can also lodge a dispute with the credit bureau to remove it, and if that has not been done after 20 days, appeal to the Credit Ombud for help.

2. Settle your debts

When banks look at a potential home buyer’s profile, they check their credit history and risk profile. Although settling an outstanding debt does not automatically guarantee a favourable credit score, as the repayment history of a debt remains on your credit record for two years; good debt management can work in your favour as the banks can only assess what you will do with credit if they can study your repayment track record.

3. Pay your credit card balance

A credit card has a strong influence on your credit score, so try to include at least one of these in the mix. “Paying back your credit card balance has a significant impact on your score, as it’s not just about having the credit, but how you deal with it that the banks are assessing,” explains Cox.

4. Pay your bills on time

While there are steps that can be taken to rehabilitate a bad credit record, the best way to be financially fit is to pay your bills on time and in full. “It’s simple really: to ensure a good credit record, don’t get into more debt than you can afford, and then make sure you pay it all back,” says Cox.

How to monitor your credit record

Every South African is entitled to check their credit record, at no cost, once a year, through any registered credit bureau. Cox advises consumers to apply for their free credit rating report annually. “And if you get bond approval, make sure you maintain a good credit rating because if it goes bad before transfer takes place, the bank has the right to withdraw their offer of home loan finance.”

Keeping your credit record in good shape will put you in a strong position when it comes time to apply for a home loan, but if you are concerned about bad debt, remember that ooba home loans has successfully secured approval for one in every three applications that are initially turned down by the bank.

They also make the home buying process easier by offering a range of home loan calculators that can help you determine exactly what you can afford. Start with ooba home loans’ free, online prequalification tool, the ooba Bond Indicator. Then, once you’ve found a home that meets your requirements, you can apply for a home loan.