Your credit score is a very important part of your application for mortgage financing. You will need an excellent credit score to secure the best possible interest rate from your lender. Now is the time to plan if you are thinking of purchasing a home or an investment property in the next six months. 

What makes up your credit score?

35% -Based on your payment history

35% -Based on your credit capacity

15% -Based on your length of credit history

10% -Based on your accumulation of debt in the past 12 - 18 months

10% -Based on your mix of credit; installment vs revolving

Here are some important tips to keep you in the credit game :

1.    Review your current credit report for accuracy.  Get a copy of your credit report and look at it for accuracy. First, make sure that the information in your file is about you and only you, not someone who has a similar name or a similar Social Insurance Number. It is very common for your credit reports to have mistakes or incorrect information. At a minimum, make sure that the information you are being evaluated on is current and correct.

2.    Pay your bills on time.     Sounds like a no-brainer, right? Payment history accounts for roughly 35% of your credit score. Paying bills on time is the most important thing to do. If you’re struggling to catch up, contact your creditors to work out a payment schedule. Missing one payment could take up to 24 months to repair your credit.

3.    Repair credit report mistakes.     If you find something on your credit report that is incorrect or missing, you should dispute the mistake by contacting the credit bureaus directly ( Equifax or Genworth ). All credit bureaus have their dispute procedures on their website. They are also required by law to investigate any disputed items and these investigations will usually be done within 30 days of your request.

      4.    Increase the length of your credit history.  This accounts for about 15% of your score. Don’t cancel your old card or get a lot of new ones in a short time span because this can hurt your score.

      5.    Keep credit card balances low.     It’s a good idea to keep the balances below 25% of your available credit. Even if you pay off your credit cards every month, a high average balance will impact your score. This accounts for about 30% of your credit score.

     6.    Keep new credit requests to a minimum. This accounts for 10% of your score. Every time a lender runs your credit, an inquiry is recorded. If you are trying to get a loan, don’t apply for new credit cards first.

     7.    Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.

8.    Pay off debt rather than moving it around. The most effective way to improve your credit score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.

     9. Beware credit-repair scams. By all means, don’t pay someone to wipe away the negative items in your file. If they don’t follow through, the damaging items will reappear in two or three months.

It is so important when you are planning to purchase real estate to have the BEST mortgage broker on your TEAM. My TEAM Mortgage Broker, Jerome Trail, from The Mortgage Trail is definitely one of  the best in my opinion. Are you ready to discuss your mortgage finance options?

Book a free mortgage consultation with Jerome HERE. 

What's next?

P.S. Download our FREE Home Buyer's Guide  OR our FREE Home Seller's Guide

P.S.S. Book a FREE Home Buyer Consultation OR a FREE Home Seller Consultation