Thank you visiting our blog and reading. If you’re here today, then you’re frustrated with debt and credit problems, and are interested in mortgage financing. We are pleased to give a brief overview of how Canadian Mortgage Brokers can help. We will be covering...
All aspects of credit: the importance of your credit score, ways you can improve your score and the kind of mortgage that will help you get out of a not so perfect credit situation.
You’ll also learn about how Canadian Mortgage Brokers can help you get your credit back on track so you can have a stronger financial future.
Your Credit Score
First let us say that to us, you’re not just a number. But to lenders, you are. And it’s an important number: your credit score.
Your credit score – the higher the better – is your passport to financial opportunities. Known as a FICO score – with a possible range of 300 to 900 -- your number tells lenders what kind of a risk you are likely to be as a borrower.
At 750, for example, lenders are very happy, offering a fast approval at the best possible rates. This score says the person is reliable and responsible with debt.
Below 620 on the other hand, and you could pay a premium on your borrowing rate, perhaps only because you’ve been late paying bills or had a small amount go to collections.
Maybe you didn’t even know that someone – somewhere – was keeping track of how you handled your credit.
If you’ve ever had a credit card, borrowed money, or leased a car, the credit agencies probably know who you are. The companies that hold your credit accounts and loans report transactions to credit bureaus so they can be referred to in the future, with your consent.
Your score is based on:
• Previous payment history (approx. 35% weighting)
• Current level of indebtedness (approx. 30% weighting)
• Length of credit history (approx. 15%)
• Pursuit of new credit (approx. 10%)
• Types of credit available (approx. 10%)
Previous payment history (approx. 35% of score)
• Your track record making credit payments is the most heavily weighted attribute.
• Quite simply: do you pay your credit accounts on time?
• Late payments, collections, judgements, liens, foreclosures, bankruptcies are very serious.
• More recent events and large amounts will affect your score more than older events and small amounts.
• Always pay your credit obligations by their due dates!
Current level of indebtedness (approx. 30% of score)
• Are you overextended or not?
• Having too many credit cards or keeping your accounts at or near their maximum limit can signal that you don’t manage credit responsibly, and that you may have trouble making payments in the future.
• Keep your credit balances at no more than 30% of your limit!
Length of credit history (approx. 15% of total score)
• The longer you have had credit in good standing, the better.
• Considers your oldest account and the average age of all of your accounts.
• Don’t close a long standing credit account without first getting some advice!
Pursuit of new credit (approx. 10% of total score)
• Opening several credit accounts in a short period of time is a risk indicator.
• Be careful opening new accounts just to get an upfront discount. Applying for new (and especially unneeded credit) can hurt your score
• Too many credit applications can signal credit desperation!
Types of credit available (approx. 10% of total score)
• Do you have a healthy mix of credit?
• Having a car loan, mortgage and credit card is more positive than a concentration of debt in only credit cards.
• Credit cards can be a trap; it’s not free money. Ask yourself “do I really need this?” before purchasing on credit.
Order Your Credit Report
Knowledge is power so order your credit report and see what the lenders see.
Order your credit report free through the mail, or for a fee you can order it online and download it immediately. Contact:
Equifax at 1-800-465-7166 or www.equifax.ca. Or,
Trans Union 1-866-525-0262 or www.transunion.ca
As soon as you get your report, check closely for any errors. If something is wrong, report it immediately so that your file can be corrected. You can also add a short qualifying statement to explain the circumstances surrounding any negative information in your file.
What Can You Do To Improve Your Credit?
Your credit score captures your perceived lending risk at a moment in time, but that score can regularly change.
That’s a great opportunity for you, because it means you can improve your score with the right credit “behaviours”. Manage your score to make the most of your financial opportunities!
Good Credit Behaviours
Pay your bills on time and make at least the minimum payment. Using your credit card regularly and paying it off promptly is better than not using it at all, or carrying a big balance.
Your score will be higher if you have a gap between your credit limit, and what you currently owe. Try not to let your balance go more than 30% of your limit. Better to be below the limit on more than one card than at the limit on one card.
The longer your history, the better. Don’t cancel your oldest credit card – even if you no longer use it. That good history can help you.
Get advice before you cancel unused cards. And don’t take out new credit accounts.
What About?
Previous bankruptcy
• Typically you need to be 1 or 2 years discharged before you can qualify for mortgage financing
• Lenders will listen to your reason behind bankruptcy
• Try to have some re-established credit
Consumer Proposal/Credit Counselling
• More favourable to lenders than bankruptcy
• If not paid out, new mortgage must pay it out
No credit history, then no credit score
• Let’s talk about the ways you can establish a credit history.
The Best Credit Advice?
• The best credit-fix strategy of all? Make an appointment with an experienced mortgage planner.
• Your house is probably your biggest debt, and a good planner can tell you how to manage that debt wisely.
• Maybe you can roll your other high-interest debts into a new mortgage, lowering your monthly payments, boosting cash flow, and saving you interest. How’s that for a fresh start?
Why Use A Mortgage Planner?
According to CMHC (Canada Mortgage and Housing Corporation), over 40% of mortgages written in Canada are now arranged through mortgage brokers.
Our American neighbours have the majority of all mortgages arranged through mortgage brokers. In following this model, we’re changing the way Canadians manage their most significant personal liability.
A mortgage is one of the most important financial decisions you may ever make, and with so many choices and ongoing decisions, the right advice can have a huge financial impact. You need a mortgage solution that meets your unique requirements now, and ongoing strategies to help you achieve your wealth accumulation goals, which is why we offer...
• Choice (over 50 lenders)
• Independence & objectivity
• Negotiating power (best rate for your situation)
• Access to rate promotions
• Expertise
• A focused specialist
• Potentially lower rate at renewal
• One credit inquiry
• No cost to you (OAC)
• Personal attention
• Trained and ready to help you achieve your financial and home ownership goals.
Summary
Professional advice – and a mortgage that rewards you for fixing your credit – can be a powerful money-saving combination and the pathway you need to go from FRUSTRATION to a BETTER FUTURE.
What outcome do you want?
Contact Canadian Mortgage Brokers Today to Find out More!
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