Qualifying for a new mortgage? Improve your credit!
First mortgage or fifth, boosting your credit rating is always a good thing
Whether you are a first-time home buyer or renewing for the last time, having a good credit score is a big deal when you are looking for a mortgage.
Your credit score determines what kind of mortgage you can get, what rate you get it at or whether you can get one at all! So regardless of your housing situation, age or annual income, the numbers that really matter are the ones in your credit rating.
What is a credit score and what are the right numbers
Essentially a credit score is a system that rates your reliability as a creditor, and that’s what lenders look at when you ask them for money. Lenders check your credit by requesting a credit report from one of two Canadian credit reporting agencies – Equifax or TransUnion. The report shows your history of borrowing and repaying debt from various sources.
How to get a credit rating
It’s important as a potential first-time home buyer to think ahead, as credit scores are based on your history – at least a couple years, typically. One easy way to get a credit rating is to get a credit card, make small purchases and pay off the card completely after each purchase. Don’t have or can’t get a credit card? Look into taking out a small loan with a co-signer. Having a couple of different cards or other types of credit is also a good way to accelerate credit history.
How to improve your rating
Following are some tips, from the Financial Consumer Agency of Canada (FCAC), on things to do to improve your credit score:
- Pay bills on time! This is the biggie! You don’t have to pay it all, but pay it often. Some credit cards and cell phone companies have reputations for reporting even if you’re just a few days late.
- Try to pay your bills in full by the due date. This is just a good habit to get into; it helps your credit rating and will save you money on interest, too! At least pay the required minimum amount on your credit card statement.
- Pay your debts as soon as is possible.
- Keep below your card’s limit. The more money you owe, the more influence on your credit rating.
- Don’t apply for credit too often! Too many potential lender inquiries over a short time period can negatively affect your score. That being said, if you’re the one who is inquiring about your credit score, there is no problem – ask away.
Questions on any aspect of buying and selling your home – feel free to get in touch. Whether you want to know about great local mortgage brokers or when to list your house, I can help.
Call me anytime at 250-792-0464 or email melissa@melissaberrigan.ca. Don’t forget to check out local listings on my website or Facebook page!