We’ve been out of the property market since 2012, but are hoping to pick something up in the next 2 years or so, now my wife’s rejoined the workforce.
With her working, we decided to replace one of our old cars, and were going to save for it, but then decided it would be better to take a loan out, as banks (used to?) like you showing your ability to service a loan.
Before taking this step, I checked my credit rating, curious to see if the odd late phone bill had caught up with me. And - my rating was over 800 / 1000. “Excellent”.
Take out a $20k loan… and my credit rating drops 100 points. “Very Good”.
A month later, it’s dropped a further 40 points, despite not just paying my repayments on time, but paying 4x the amount required. “Good”.
What’s going on here?
Reduced borrowing capacity due to the new loan, driving the points down? OK, I get that - but why the further decrease, when I’m making my repayments on time? There’s no negative reports on my rating.
I think I preferred ignorance…