5 Steps to Building Better Credit Before You Buy a House

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Building up a solid credit score is an important step to take before purchasing a home. After all, the better your credit, the more likely you are to get an attractive interest rate and better loan terms. Fortunately, there are several simple ways to build your credit and to put yourself in the best possible situation for the most attractive loan terms. Here is a look at just a few of the things you can do to build and to improve upon your credit.

Step #1: Check Your Credit Report

Perhaps the simplest step you can take to improve your credit is to simply check your credit report on a regular basis. By checking on your reports with both TransUnion and Equifax, you can be sure the information they contain is accurate and complete. If you discover any errors or if you find anything suspicious on your report, be sure to take the necessary steps to correct it.

Step #2: Open a Bank Account

Opening a bank account is another simple way to build credit. Of course, to enjoy the benefit of opening a bank account, you need to be sure to use it responsibly. Even if you haven’t managed to build a great credit score, the relationship you have built with the bank will go a long way toward helping you get a mortgage loan.

Step #3: Get a Credit Card

While credit cards have a bad reputation for causing people to go into debt, the reality is that credit cards can go a long way toward helping you build your credit. In fact, when used responsibly, a credit card can be a very handy tool. If you are scared your spending will get out of control, you might want to apply for a secured credit card rather than a traditional credit card. With a secured credit card, you load the card with money beforehand. Yet, because you are still responsible for paying the bill each month, you continue to build credit with a secured credit card.

Step #4: Avoid Taking Out Too Many Loans or Credit Cards at Once

Getting a credit card and using it responsibly is a great way to build credit. At the same time, don’t take it too far and open up multiple accounts or apply for several credit cards within a short period of time. If there are several inquiries into your credit report, it appears as if you are desperate to get money. As a result, your credit score will take a hit and lenders will consider you to be a higher risk.

Step #5: Keep Your Debt Low

Carrying too much credit card debt of having too many outstanding loans will also make it difficult for you to get a mortgage loan. Therefore, you should avoid accumulating too much debt. If you have a high debt-to-income ratio, you might want to consider paying off a few bills before you pursue obtaining a mortgage loan.

Tyler Tost Broker / Owner of Conexia Mortgage is a Calgary based Mortgage Brokerage with some of the best Calgary Mortgage Brokers in the business. Conexia Mortgage works with numerous lenders to enable clients to have a choice of lenders and best mortgage rates available and can prepare financing across Canada. Visit our website to apply for your next Canadian Mortgage.

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