How the banks’ internal client rating affects your home loan application

Cape Town Property

Each bank has a system set in place which grades individuals on how well their accounts are managed as a whole.

The best grading is normally reserved for those clients who have obtained a healthy balance between having a few credit accounts, as opposed to those individuals servicing too many accounts.

It is advisable to limit the amount of credit profiles you have open, to approximately 4 or 5 accounts, before purchasing your first property.

Although, the opposite of having too many account, is also not an option. You will need to have at least 2 accounts registered in your name to help create and build a repayment profile before applying for a home loan.

Not only does the record of external debt repayments impact your internal grading score, but also the manner in which your monthly bank account is conducted.

Missed debit orders are a major threat to the banks, and these records remain on your score grade profile for at least 12 months.

It is safe to assume that the banks scoring system has been designed to immediately decline an applicant with unpaid or rejected debit orders reflecting on their bank statements.

One should always avoid these circumstances as best as possible, and ensure sufficient funds are available to accommodate any monthly debit order runs.

Another important factor to note is the punctual and timely repayment of monthly retail accounts. It is imperative to repay retail accounts before the minimum due date. Even though we may argue the account was paid in full, the fact remains that the payment was received late and this is viewed as a slow payment record.

Each month the credit provider sends a report to the credit bureaus on a certain date, if your payment has not arrived, it reflects as an arrear and missed payment.

This will start to decrease your credit score and ultimately impact your bank score grading. It will then take some time to rebuild your score, at least 6 months if that.

It’s best to set future automated repayments via your online banking system to ensure the payments arrive on time.

Monitor your account profile by subscribing to the credit bureau’s for monthly updates on your credit report, this will help you to stay on top of the credit game and keep you one step ahead of securing finance next time around.

2 comments on “How the banks’ internal client rating affects your home loan application”

  1. hi im on debt review an been on there for a while now reason for that is i was not working nw ive been working but haven taken myself off debt review as to im paying my acounts off 1 by 1 an playing a safe card will i get a home loan if i apply an yes i can afford it

  2. Hi

    I was recently decline for a switch home loan due to
    my credit rating was low

    Do you have a solution for this type of problem or must I write
    a letter of motivation to the banks

    Waiting to hear from you



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