When it comes to getting a mortgage your credit score is more important now than it ever has been. In the past few years we have seen more and more people run into trouble in getting a mortgage simply because they did not know what they were doing with their credit was lowering their credit score. Lenders and mortgage default insurers have been taking a much harder line on credit scores and so it is very important you manage your credit properly well in advance of getting a mortgage. Trying to repair a credit score just prior to getting a mortgage often does not work.
Here are some key items you need to be aware of.
- Missing a payment, even as small as $10, will lower your credit score immediately.
- Your cell phone bill reports on your credit report. Paying it on time is important.
- Lenders view orderly payment of debts and credit counselling the same as a bankruptcy. If you enter into either of these you won’t be able to borrow any money for many years.
- Most mortgage lenders report your mortgage on your credit bureau.
- Most of your information is reported on your credit bureau for 6 years so make sure you take care of all payments.
- It is important to make all of your payments on time. This greatly impacts your credit score. If a lender allows you to make a late payment, their system will still report you as late to the credit bureau.
- Try to stay below 35% of the limit of your credit. If you have a limit of $10,000 then keep your balance below $3500.
- The longer you have had credit the better. If you have a piece of credit for a long time and want to close it make sure you have other credit that you have had for a while as well and not just newer credit.
- Check your credit at least once per year to make sure there are no unauthorized charges or ratings from your creditors that don’t make sense.
Here is a link to a full guide on understanding your credit score and report from the Financial Consumer Agency of Canada: Credit Guide.
If you would like a complimentary analysis of your credit score to ensure you will qualify now or in the future for the mortgage you want please contact our office and we will be happy to help you.
For more information on our mortgage products please visit our website at www.ymscanada.ca.