Credit Score – What is it and why it matters
One of the key items in getting approved mortgage is your credit profile. Note profile and not score. While the score is important there are some credit factors that may make it difficult for a borrower to obtain a mortgage.
Generally banks are looking for credit score above 650+. Between 600-650 may work with some lenders; however, they may have reservations and look at the application in more detail or not allow some of their specialty programs. Scores below 600 will often mean higher interest rates and requirements of 20% + downpayment.
You can check your credit score for FREE: Call Equifax at 1-800-465-7166 to request a free copy of your credit report.
Want an awesome credit score. Here is how to make sure you score is great!
- Keep at least 2 active trade lines (credit cards, loans, student loans, lines of credit)
- Never miss a minimum payment. Always pay on time!
- Do not run you balance past 75% of the total available credit (NEVER go over the limit)
- Don’t forget to pay your other bills that might end up reporting as collection if they are missed: Common ones we see are. ICBC claims, parking tickets, moving companies, final phone bills (when switching phone companies), etc
If you have had late payments in the past or currently have high balances close to or at the limit this could lower your score. The best way to improve your score is to pay down the balances of your debts, make your payments on time, and continue to use at least two sources of credit so that they report every month that payments have been made on time.
We suggest checking your credit report once or twice a year. Here are a few items you will want to verify:
- Mailing Addresses are correct
- Social Insurance Number is correct
- Make sure that you don’t have any incorrect late payments
- Errors in your accounts (For example if you had a car loan but paid it out and it is still showing as owing. This may be because the company forgot to update equifax)
If you are thinking about buying a home or refinancing in the coming year it’s a good idea to have us review your credit with you to make sure you don’t have any potential roadblocks due to credit score or errors on your report.