Let’s talk credit as it relates to real estate. A good credit score complimented with proven income are the main imputes required for a mortgage approval. It’s never too late to check, maintain and improve your score. Start at either of Canada’s main reporting agencies Equifax or Transunion. Long story short, a score of 700 basically implies you’re in the clear, and have maintained your credit facilities well enough for most lenders to be satisfied. Under 680 might imply more hurdles for you to jump through to satisfy a lender.
Remember, your rating is based on many factors being reported and a statistical calculation of all those factors. So be proactive and aggressive, as a banking error might miss a payment or a facility might be reporting the facts incorrectly. If you do have a low credit score, no matter the reason, here are some tips for improving your credit rating:
- Check your score and reported credit limits (you are allowed to ask for your credit report for free once a year, a simple report of everything, not with a score).
- Write letters to lenders disputing errors.
- Add more line items, get a credit card and/or raise its credit limit, become an authorized user on a friend's or relative's card, get a bank loan, line of credit or buy something like an appliance on credit.
- Pay your bills more often than once a month and well before they are due.
- Only use 10-30% of the total credit limit for what’s calculated for optimal “credit utilization”.
- Never sign up for something or buy something on credit you won’t 100% be able to pay.
Do this consecutively for a year and check the results. Every little thing you do will count in the long-term but make sure you are consistent. Remember, a credit score is something you should be thinking about years before you actually buy a home. It’s also used by landlords to determine if you would be a good tenant.
Here are some helpful links explaining why good credit matters:
Feel free to come by our office if you’d like us to help you pull your credit report with score. We’ve helped many clients budget and maintain better credit to put them on the path for home ownership. Give us a call at 416-222-1212 or email us at email@example.com if you have any questions or would like further information.