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Understanding Credit Reporting Agencies in Ghana For Mortgage Financing

Credit reporting agencies play a crucial and influential role in the mortgage application process in Ghana. It is important to have a deep understanding of these agencies and their operations to effectively guide clients through the mortgage application process. In Ghana, there are dedicated credit reporting agencies that track individuals’ credit history and provide vital information to lenders. However, it is worth noting that if your clients have lived overseas, they will need to provide credit reports from the three major credit reporting agencies in that particular country: Equifax, Experian, and TransUnion.

Credit reports are comprehensive documents that reveal crucial information about a borrower’s creditworthiness. Lenders review these reports and consider various factors to assess the borrower’s ability to repay a mortgage. One of the important considerations is the debt-to-income ratio. In Ghana, lenders typically prefer a debt-to-income ratio between 28% and 33%. To calculate this ratio, you compare an individual’s total debt obligations to their income. For instance, if your monthly income is 1,000 Cedis and your total monthly debt payments amount to 400 Cedis, your debt-to-income ratio would be 40%. However, it’s essential to note that different banks may have specific requirements, so it is advisable to check with multiple banks to understand their specific criteria.

Supplementing income can also play a significant role in the mortgage application process. In some cases, borrowers may have additional sources of income that can be considered to supplement their primary income. For example, if they have rental properties generating income after expenses, that amount can be added to their primary income during the qualification process. As a mortgage professional, it is important to inquire about any additional income sources your clients may have and ensure that all relevant information is accurately represented to present a comprehensive financial profile.

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Building and maintaining a positive credit history is crucial for mortgage applicants. Banks thoroughly examine credit histories to assess an individual’s ability to repay debts. Factors such as consistent on-time payments and any instances of late payments or defaults are carefully scrutinised. If there are any negative entries on a credit report, it is important to address them appropriately. In some cases, a letter of explanation can be drafted to provide context for late payments or other isolated incidents. However, it is crucial to note that such incidents may impact the interest rates offered by lenders. Therefore, maintaining a clean and positive credit history is of utmost importance.

It is also essential to understand the seller’s right to counteroffer when submitting an offer for a property. Sellers have the prerogative to propose changes to the terms and conditions of the offer, such as price adjustments or requested repairs. Negotiations and finding common ground are typical parts of the home-buying process. As a mortgage professional, clear communication with your clients about the seller’s counteroffer is crucial. This will help your clients make informed decisions based on their goals and financial capacity, ensuring a smoother and more successful home-buying experience.

One may ask,” Does Ghana have a credit bureau?,” Yes, Ghana has a credit bureau. The credit bureau in Ghana is known as the Credit Reference Bureau (CRB). It is regulated by the Bank of Ghana, the country’s central bank. The purpose of the credit bureau is to collect and maintain credit information on individuals and businesses, which helps lenders and financial institutions make informed decisions when extending credit. The CRB collects data from various sources, including banks, microfinance institutions, and other credit-granting organisations. It compiles this information into credit reports, which contain details such as an individual’s credit history, outstanding loans, and repayment behaviour. These credit reports serve as a valuable tool for lenders to assess the creditworthiness of borrowers and manage risks associated with lending. Additionally, the credit bureau also enables individuals to access their credit reports and monitor their credit profiles, promoting financial transparency and accountability. Overall, the presence of a credit bureau in Ghana contributes to the development of a sound credit infrastructure and supports responsible lending practices in the country.

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By having a comprehensive understanding of the role of credit reporting agencies and the factors lenders consider, you will be able to guide your clients more effectively through the mortgage application process in Ghana. Emphasise the importance of maintaining a positive credit history, managing debt-to-income ratios within acceptable limits, and exploring supplemental income options. Equipping your clients with this knowledge will empower them to make informed financial decisions and significantly increase their chances of securing a favourable mortgage. Considering buying a property using a mortgage in Ghana? We are here for you, let’s have a chat so I can guide you to make the right decision.

This article is an excerpt from the book ”The Luxury Agent Blueprint: Building a Profitable Career in the High-End Real Estate Market”  by Kekeli Buckner. The book is designed to guide real estate agents, beginners and professionals alike to gain more insight and understanding. The book has 26 chapters which cover topics, such as negotiations, gaining clients, mortgages, commissions and more. Click here to get a copy. 


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