The 4 Things You Need To Know About Your Credit And How to Fix Them.
Greg is excellent at kicking butts into financial gear and organising investment loans. Arranging credit without the 4 C’s being in place is giving the bank a reason not to trust you. Impeding your ability to grow your wealth.
With that let’s get into the 4 C’s and get your investing on its way.
Your Character proves that you are someone the bank believes is a safe bet. Banks will look you up to see if you have any credit crap against your name. Greg says it is crucial to keep on top of your credit history because financial institutions are reporting positive and negative information. Any default can be a big cross against your name. You can check your credit history at www.mycreditlife.com.au. It is vital that any crosses against your name get cleared up quickly, but it’s important to know what feeds your credit history and get on top of it immediately, and nowhere your financial leaks are and if you have none fantastic.
Banks use your capacity to see how much you can borrow and if you can service the loan. You will need to be able to prove your capability with documentation. If you own a business, you will need to have a record of your profit and loss statements, PAYG, a letter from your accountant. If you are an employee, you will need to show payslips. All of this is very straightforward, but the number of people who have not kept good records gets tripped up whenever they go for a loan because they can’t find the proper documentation and records to prove to the bank that they can handle the loan. Since the GFC, banks have tightened their regulations. That includes low doc loans you will still need to provide some form of documentation to prove that you have an income and can service the loan.
Your assets and that you have proven that you can service the loan. Banks like to see you have a track record of accumulating assets and repaying debt. Your capital largely ties in with your character. The more assets you can prove to have the more likely you are to get a loan and loans in the future.
Your collateral is what you can put up as security against the loan. The easiest to leverage is bricks and mortar, but other things include gold, blue chip shares, cash, a profitable business (on a case by case basis) or even if you own the commercial property where the business resides, or you own commercial property.
The key is to set up your financial foundations correctly. Getting clear on exactly where you are within the 4 C’s means when an investment opportunity comes across your table, it has met your money rules, and you have done your due diligence, you can go ahead very quickly with the loan and get your wealth creation off to a great start.