[Invis – October 7, 2020]

There’s a virtual credit file with your name on it! When it comes time to take out a mortgage, that file gets opened and the result is a credit score.  This is one of the determining factors for qualification and can also impact your mortgage rate.

The good news is that you are entirely in control of your own credit score. Even if your past credit history has been bumpy, there are steps you can take to increase your score: showing lenders that you are a good risk and worthy of their best rates. Here are a few important tips:

1. Pay your bills on time. This is the single biggest factor in your credit score. One option is to set up automatic payments if possible or use your calendar alerts to remind you. This one habit carries the most weight when it comes to your credit score so be sure to take it seriously.
2. Create your own spending limit at 30%. If the credit card company gives you a credit limit of $10,000, keep your balance at $3,000 or no higher then 30% of the available funds. Have more than one credit facility? Balance them out. It’s better to be at 30% on three cards than have one at the limit and two that are never used. You want to show that you are using your credit but using it wisely.
3. If you are getting too close to your limit. pay more than the minimum every month and, if you can, work towards clearing off your balance entirely. Having your credit limits increased can help if that doesn’t cause additional spending.
4. Keep that history. Make sure you do have a credit history. You may have a low score because you do not have a record of owing money and paying it back. Since history is important, you don’t want to cancel a card and lose that history. The longer you’ve had a card, the clearer the picture is of how you manage your debt. If you feel you really need to cancel a card, get advice first.
5. Never let a bill go to collections. This can be a tough one if you’re short of money or a bill is under dispute. But a bill that is sent to collections is – next to bankruptcy – a black mark on your credit report that will haunt you for years to come.  If you’re having trouble paying, talk to the creditor about a negotiating a payment plan.
6. Be selective. Applying too frequently for credit has a negative impact on your score. A raft of cards looks like you’re an out-of-control spender and not a good credit risk. So when you’re asked: “Would you like to apply for our Store Card to save on your purchase?”, just say NO; the high rate that goes with that card isn`t worth your savings on that particular purchase.

Get in touch with us if you want to discuss taking control of
your credit score. If you need a mortgage while you’re still
working on improving your score, we can also advise how that may
be possible. We are here to help!