All homeowners and homebuyers in Brampton and the GTA should be aware of what their credit score is and how to make sure it stays healthy. It’s important because your credit score tells lenders what kind of a risk you are likely to be as a borrower. A low credit score can prevent you from getting the lowest mortgage rate, or even from getting a mortgage at all.
When your mortgage application is being considered, your lender will look at your credit habits. You don’t want a low score to keep you from qualifying or getting a great rate, especially since this important factor in your mortgage negotiation is entirely within your control.
It’s easy to have good credit habits:
- Don’t let a bill get past due. The single biggest factor in your credit score is paying your bills on time. Don’t let a bill get past due. This one habit carries the most weight when it comes to your credit score so be sure to take it seriously. If you need to, set up automatic payments.
- Know your credit limits. Your credit score is based on your balances relative to your available credit. Look at your credit limits and try not to use more than 30% of the available amount. If your limit is $10,000, try to never let the card go higher than $3,000.
- If you are getting too close to your limit, pay more than the minimum every month and work towards clearing off your balance entirely. Having your credit limits increased can help as long as that doesn’t cause additional spending. It’s also better to spread out balances and be under 30 percent for each card instead of having one card with no balance and another at your limit.
- Keep that history. Make sure you do have a credit history. You may have a low score because you do not have a record of owing money and paying it back. For your lender to assess your borrowing profile, you’ll need two sources of credit that are each at least two years old. Since history is important, you don’t want to cancel a card and lose that history. The longer you’ve had a card, the clearer the picture is of how you manage your debt. If you feel you really need to cancel a card, get advice first.
- Avoid collections. Don’t ever let any bill go to Collections, even if it’s for a small or disputed amount. This black marks on your credit can take a long time to erase. Try to pay a portion of the amount to avoid it going to collections or make alternative arrangements with your creditor to pay back that debt.
- Just say no. Applying too frequently for credit has a negative impact on your score.
So when you’re asked – would you like to apply for our Store Card to save on your purchase – just say no; the high rate that goes with that card isn`t worth your savings on that particular purchase. Be selective in the credit you apply for.
Brampton and GTA homebuyers and homeowners, if you are wondering how to improve your credit, I would be happy to review your situation and outline your best options to boost your score. If you need to get a mortgage while you work on improving your score, I can also advise how that may be possible. I’m here to help!
