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PROPERTY TALK
For the Buyer
As a property buyer one tends to be hesitant to apply for credit, but the reality is that most people cannot afford to buy a property cash and require financial assistance to fund the purchase of their property.
Understanding Credit
A credit application is easier than one thinks, despite the tightening of the Credit Act and various requirements put in place to ensure you do not become over indebted and run into financial trouble down the line.
Credit works on a scoring system which feeds off of two traditional platforms in South Africa; namely Transunion and Experian. Banks use the very same platforms and generate a scoring system of their own which are generally significantly influenced by these two Credit platforms. Scoring works on a negative score; meaning that everyone starts with the highest possible points which have points deducted on every negative activity. The Credit Platforms work on a scoring system from 001 to 999 and banks simplify it from 1 to 9. The higher the number the better your account behavior and greater your score.
Top Score
There are certain things that one can do to generate a high score and even correct a bad score. Here are some guidelines on how to do that:
- Open an account: It seems contradictory, but if you open a clothing account or have some form of continuous account you develop a score based on the type of payment behavior you maintain.
- Don’ t apply for credit: when you intend to buy a house; its normally a planned event. It is recommended that you do not apply for credit of a large value( ie. Buy a car, boat, or large personal loan). The moment that a company performs a credit check on your profile; the Credit platforms automatically reduce your score for a temporary period— normally a month or two.
- Don’ t Default: Ensure that all your accounts are paid up to date and that you have not reversed any Debit Orders. Missed or Late Payments will be seen as a negative activity and your score will be reduced— even if it is an error of some kind.
- Correcting Credit: Minor things like Missed Payments generally return to normal scoring between 3-6 months; however being Blacklisted or having long outstanding debts( behind on payments) have longer reach and consequences.
Handy Tips
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Know your budget and do your best to stay in budget.
Try and put aside a savings portion every month in a separate account— no matter how small
I order to qualify for credit you will need to have some form of credit or accounts depicting your spending habits.
Open a Cheque Account— Banks see this as a requirement to qualify for credit
For more advice on property options and the due process of buying,
selling and investing …
Marc van Heerden Cell: 073 198 9369 Tel: 041 360 0365 marcv @ sothebysrealtype. co. za www. sothebysrealty. co. za Each office is independently owned and operated
� Plan, Plan, Plan!
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