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Another nice milestone for us this week as we received our 800th productreview.com.au review, whilst still retaining our 5.0 star rating. We put a huge amount of work into ensuring the best possible service, linked to the best possible finance outcome for our clients, so it’s nice to be rewarded with such positive ongoing feedback.
The way in which brokers are remunerated was called into question again this week by consumer groups, who argue the current commission based model calls into question the quality of product recommendations being made by brokers.
As always, the suggestion we as brokers are not providing the most appropriate recommendations is ludicrous given we are required to by law, and the simple fact that all banks pay virtually identical commission so there is no financial gain to the broker for recommending one over the the other. It’s worth noting (again!) that borrowers are not covered by Best Interest Duty regulations if they deal directly with a lender, meaning that a lender does not need to recommend the most suitable loan product for the borrowers needs.
In this week’s newsletter, we explain the importance of a good credit score, and what credit scores look like.
A credit score is a numerical representation of a borrowers creditworthiness, reflecting how reliable they are in repaying debt. Lenders use this score to assess the risk of lending you money, particularly when applying for significant loans like a home loan.
What effects a credit score?
Payment history: Most importantly, consistently paying bills and loans on time helps boost your score, while late payments, defaults, or bankruptcies can lower it.
Credit utilisation: Using too much of your available credit, such as maxing out credit cards, can negatively affect your score.
Credit inquiries: Multiple credit applications in a short time can lower your score, as they may suggest you’re struggling financially.
Length of credit history: A longer credit history with positive repayment behavior tends to improve your score.
A high score not only increases your chances of being approved, but it can also result in lower interest rates and more favourable loan conditions. On the other hand, a low credit score might limit your borrowing options, leading to higher interest rates or even loan rejection.
What does a good credit score look like?
Different credit reporting agencies use different scales for their credit scores:
Equifax:
Below average: 0-459
Average: 460-660
Good: 661-734
Very good: 735-852
Excellent: 853-1, 200
Experian:
Below average: 0-549
Fair: 550-624
Good: 625-699
Very good: 700-799
Excellent: 800-1, 000
Illion:
A low score: 1-299
Room for improvement: 300-499
Good: 500-699
Great: 700-799
Excellent: 800-1, 000
If you have a client who would like to know their credit score, or a client with a poor score who needs advice about their lender options, have them contact us.
Variable
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.
