1- Pay your bills on time. Sounds like a no brainer but make sure that you make at least the minimum required monthly payment. Even if it's only $10. Some people make a mistake in thinking that if they make a payment of $30 one month then they're good for the next three months...not so! This will show up as late payments on your credit report and will negatively affect your score. That being said, if you only ever make the minimum payment then you are in danger of exceeding your credit balance. This brings us to the next tip.
2- Keep your credit balances low. I recommend keeping them below 50% of your limit if at all possible. Your credit score is calculated partly by your balances owing and available credit ratios. It is even more detrimental if you have actually exceeded your limits. This is very, very bad for your credit score. It is also not advisable to close out available credit as this may negatively impact your score. I know it this advice may seem counter intuitive but this makes sense once your understand that high available credit and balances ratios will help your credit score. However, if you cannot trust yourself not to charge up those available credit limits then it's probably best not to have them. In this case then you should think about just keeping a credit card or maybe two at the most with reasonable limits. You don't want to set yourself up to go into huge debts that you can't manage. Know thyself. If you have concerns about what to do please feel free to contact me. I can help advise you so that you make the right choices for you and your unique situation.
3 - Don't be a habitual credit seeker. Lenders frown upon mortgage loan applicants who are constantly setting up new accounts or attempting to do so. Each time you apply for new credit it shows up as in inquiry on your credit report. Too many are bad for your score. This is one great advantage of working with a mortgage broker when applying for a mortgage. We only have to use one credit report and use that same one to shop around to different lenders. Sometimes all it takes is one too may inquiries on your credit report to reduce your credit score just low enough to disqualify you from buying that home you want. Little things can sometimes make a big difference.
4- Check your own credit report. If you know that you will be in the market for a home in the future, I strongly recommend that your check your own credit report by visiting www.equifax.ca. It should be noted that this does not count as an inquiry on your credit report if you check it yourself. There is a small fee but it is well worth the cost to avoid any surprises and so that you can correct any errors and/or rectify any problems ahead of time.
5- Do not allow delinquent debts to be a assigned to a collection agency. Ever! Do not let a dispute with a cell phone, utility company , student loans, or anything damage your credit. It is simply NOT worth it. The most common reason given for collection items in my experience "I moved and didn't know I still owed them money". Or " I told that company that I wasn't paying cause I didn't think I should have to because
Please know that you can still dispute a debt even after it is paid. If you are in the right and you can get the company to see it your way, then they will refund the money. Even if they do not, consider it an investment in your future. Believe me, it is worth it. I have seen too many people heart broken because of a decision that they made not to pay an outstanding bill or two. If you are having trouble paying a bill such as student loans, call them to make payment arrangements.Things happen and people get into difficult situations. However, as long as you are in contact with them and demonstrate a genuine desire to work with them, they usually do their best work with you. If possible, contact creditors before your account is delinquent. They tend to be much more reasonable if you call them before they have to chase you down for payment.
As a Mortgage Professional, I can advise you of what you need to do to repair bruised credit. You should also know that less than perfect credit does not always mean that you cannot qualify for a mortgage. We look at your situation as a whole and work on your behalf in getting you a mortgage approval.
6 - So far we have discussed how to handle credit. It is also important to establish some credit. Ideally, lenders like to see at least 2 trade lines (credit cards, loans, lines of credit). The longer these have been opened the better. It is not enough just to have a credit card. You must actually use it order to establish good payment history.
Go to www.equifax.ca to order your credit report with score. This site is full of valuable information. You can also call me at 403-392-5808 or go to my siet to do an online application www.taniagrozelle.ca.
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