MORTGAGE MONDAYS WITH DANIELA SERENA
Most people do not realize just how important their credit bureau score is when applying for mortgages. It is one of the single most important thing a lender will review before proceeding with financing. This 3-digit number predicts your creditworthiness.
Credit reporting companies calculate your score based on your payment history, how much you owe, how long you’ve had credit and how often you apply for new credit. In general, the higher your score, the less likely you are to become delinquent on credit. Therefore, you pose less risk from the point of view of a Lender. If it’s above 650, you’ll probably qualify for a standard loan. If it’s lower or you do not have enough credit established, you may have trouble getting new credit.
Because your credit score and credit report are constantly changing, it’s important to review them on a regular basis, at least once a year. Since there are two main credit reporting companies in Canada—Equifax and TransUnion—it’s a good idea to check your records with both companies. This helps you identify and correct any inaccurate information, detect any fraudulent activity and gauge your overall credit health.
If you’re planning on applying for a mortgage, it’s especially important to check your report a few months in advance. When I pre-approve any Clients, with your consent, I will pull your credit bureau well ahead of time, to ensure there are no issues, or to allow for enough time to correct any problems, rather than during that short time frame of your subjects removal!
If your credit score is a little low, here are some actions you can take to improve it:
- Pay all your bills on time. Paying late or going into collection can reduce your score.
- Don’t max out your credit limits. Keeping balances below 65-75% of your limit can increase your score.
- Don’t apply for credit you don’t need. Too many inquires over a short period can reduce your score.
- Don’t close old credit accounts, even if they’re inactive. This can make your credit history appear shorter which can reduce your score.
- Correct any negative inaccuracies on your credit report. This can increase your score.
You certainly don’t want the stress of any surprises, so if you are thinking of buying or refinancing in the near future, or just curious as to where your credit stands, please give me a shout at 604.889.6750. We can go through your report and correct any issues if necessary, putting you in a position to move forward with a purchase. Have a great week!
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