Build and Maintain good credit to ensure Mortgage approval
For most of us, buying a home means financing your purchase with a mortgage. Most often, getting a mortgage depends on your how good your credit score history.
While most consumers know that they have a “credit rating,” not all know their scores or how they were calculated. If your mortgage application is refused, or approved for less than expected, there’s an opportunity for you to improve the score.
Your creditworthiness is assessed two ways:
- Beacon score, and
- A detailed history.
Credit scores range from 350 (low) to 850 (high), with 680 being the median. The numerical score is calculated based on previous payment history, current indebtedness, credit history length, number and frequency of new credit inquiries and, the types of credit held. Two so-called “Beacon killers,” are payments more than 30 days late (even small amounts) and maxed-out credit cards. The detailed history adds personal information, banking information and specifics on accounts and payments.
Maintaining and improving credit depends upon:
1) Pay all bills on time – late payments hurt your rating
2) Keep credit balances below 75%of the maximum
3) Avoid applying for additional credit; too many applications in a short period signals financial difficulties
4) Make sure that personal information in your credit file is correct
You should also review your credit history at least once a year, it is free when requested in writing or by fax.
How can a Mortgage Broker help?
Getting your finances in order can be a daunting task. A Mortgage Broker can help you assess your current credit situation and help you determine a path for credit improvement. A Mortgage Broker will work with you to find a solution for your unique financial situation.
For more information on managing credit refer to Service Canada’s website or contact your Mortgage Broker today!