Improve Credit

Your credit history is an integral part of the mortgage approval process because that history is a reliable indicator of how you will manage your mortgage and your finances in the future.

Your credit score provides a snapshot of your perceived lending risk at a particular moment in time. It can change from month to month, which provides a great opportunity for you to improve your score if you need to with the right credit behaviours.

Unfortunately, a less-than-stellar credit rating can affect your ability to get the best mortgage rates. You may not realize how much money your credit situation could cost you. That’s why it’s a good idea to talk a mortgage broker as soon as you can. Your mortgage broker can review your situation and coach you on how best to improve your credit over time. As your good credit history becomes established, in due course your borrowing options will increase. If you wish to get a mortgage while you work on bettering your score, your mortgage broker can also advise you on how that may be possible.

Your good credit is your passport to financial opportunities!

• Avoid a multitude of credit checks from lenders. In effect, each time a lender needs to check your credit report, a note is made in your file. Then again, if you are shopping for a mortgage or a car loan, multiple credit report demands over a short period of time (say, 2 weeks) are grouped together and indicated as one credit request. Under these conditions, there would be no negative effect on your credit score.  
• Limit opening new credit accounts, especially if they consist of the same type of credit (for example, a multitude of credit cards.) It’s better to have a variety of credit sources. For example, a credit card, a credit line, and a megastore club card would help your credit score.  
• Always pay your bills before the due date. Even slightly overdue payments leave a trace.
• Keep the balance on your credit line low (ideally 35% or less.) If your balance is more than 50% of the limit, it affects your credit score negatively. Needless to say, it is very important you don’t exceed your limit. 
• Accounts open for long periods of time (such as credit lines, credit cards, personal loans) are more “profitable” to your credit score than recently opened accounts. They offer a better long-term view of your payment habits and history.
• Maintaining the same address and workplace for long periods of time works in your favour. 
• Maintain an emergency fund for the unexpected such as loss of employment or decrease in revenue. This type of savings shows you’ll be able to make your payments while your situation returns to normal. 

For a better idea of how your credit score affects your borrowing capacity, we invite you to browse the Equifax website.