Better Mortgage Credit
“Having Better Credit Can Lead To Better Mortgage Rates”
Regardless of who you are, mortgage interest rates are going to be linked to your credit profile and credit score.
And while much is written about bad credit mortgages and credit repair to help those with poor credit secure a bank or institutional mortgage, there many be just as many or more people that qualify for an institutional mortgage, but could land an even better rate if their credit was improved.
If you surf around the internet, there are loads of credit repair courses and services available out there that make all kinds of promises to you as to what their product or service can do to increase your credit score. And while I’m sure there is some helpful advise found in these offerings, the process of credit management can be distilled down to a hand up of things that anyone can do with taking a course or hiring some sort of credit repair specialist.
Simple 4 Step Credit Building
Process To Follow
The first step in improving your credit is knowing what you have to improve upon.
So by accessing your own credit score and credit profile through equifax.ca or transunion.ca, for around $24, you gain a starting point or base line to work from.
Sometimes credit scores can be negatively impacted by reporting errors. The credit reporting system is far from perfect and if there are any errors in the information displayed, getting it corrected could potentially give you a score boost plus get rid of negative that lenders would otherwise be exposed to when processing your application.
Second, make sure you are avoiding the three credit score killers:
- making payments more than 30 days late
- continuously utilizing a high percentage of available credit
- excessive credit inquiries from credit applications you are making.
These three actions are the 80/20 of most credit score problems.
By avoiding them, you’re eliminating actions that can reduce your credit and over time, the absence or improvement of your management of each can increase your credit score.
Third, make sure that you have at least two sources of monthly reported credit that you are using and paying off each month. Credit reports predominantly show unsecured credit such as credit cards and lines of credit.
Even if you hate the thought a credit cards or have had problems managing them in the past, its almost essential to have at least two sources of active credit to maintain or build your credit score.
And this can be as simple as only using a credit card to purchase your gas every month and then paying it off at the end of the month.
If you work with all cash, then you are invisible from a credit reporting point of view which will impact your ability to qualify for credit.
If you’re credit is damaged to the point where you can’t qualify for a credit card, then the next best option is a prepaid credit card or a term loan secured by some sort of fixed investment vehicle like a GIC.
What is important with prepaid cards or secured term loans is that the lender is reporting the activity to the credit reporting agencies. If they aren’t then these types of actions aren’t going to yield any benefit to your credit.
Fourth, check your credit at least once a year. You have to purchase your credit score from the credit reporting agencies, but you have the write to request a free credit report from them once a year. This will not provide the score, but it will provide you with a summary of your credit activity and if there is nothing negative showing since the last report, chances are your credit score is the same or higher if you have been practicing all the other steps.
That’s about it.
If you are an adult in Canada, then you will have a credit score.
If you aren’t using credit cards, your score may very well be zero.
The path to better mortgage interest rates travels through better credit, so it is important to pay attention to how you’re managing your credit activities and how they are are being reported.
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About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel