As a mortgage broker, it is my business to assist you in getting the best possible rate for your current situation. Unfortunately your credit rating can affect your ability to get the best mortgage rates. If you have large credit card balances, too many accounts or have missed making some of your payments, you probably have some strikes against your credit score. This credit repair action list could assist with managing your credit.
Here are some credit management tips for making sure that you get the best possible mortgage rate.
• Get a copy of your credit report. You need to know what your credit issues are before you can begin to work on credit repair. You can receive your credit report for free via mail or order on-line at http://www.consumer.equifax.ca/home/en_ca. Check your report carefully. Are there any errors? Be sure to contact Equifax to have these corrected.
• Make your payments on time. Always, always pay your credit card(s) and other obligations by their due dates and that includes your cell phone bill. Collections stay on your record for six years. Even after you pay them off they will not disappear.
• Focus on your payment amounts. If you can’t pay the balance in full ensure that you pay at least the minimum payment required. Paying more will save you interest charges.
• Have a buffer between limits and balances. Know the limit on your credit cards and try to keep as far below that limit as possible. The higher your balance, there is an increasing negative impact on your credit score. Try for a balance that is no more than 30% of your limit.
• Limit your credit cards. Try to have no more than three credit cards. Use them occasionally, and pay them off promptly. Keep your oldest and most established account open, even if you no longer use it as it’s an important part of your credit history.
• Avoid applying for credit. Be careful; applying for new credit can hurt your credit report. If you are rate shopping, make sure you shop during a focused period of time (recommended 15 days maximum.)
• Build a credit history. Some people think they have great credit because they have never needed or used a loan or credit card. Unfortunately that is incorrect. Someone who has no credit history is usually viewed as riskier than someone who has credit and manages it responsibly.
• Be proactive. If your debts get ahead of you, contact your creditors and work out a payment plan with them. They want to know you are concerned and take it seriously. This can help avoid collections which will have a long term negative impact on your credit.
• Borrow wisely. Credit cards can be a trap. Ask yourself ‘do I really need this?’ before purchasing if you are using credit.
• Protect your credit. It’s your passport to financial opportunity. You’ll be rewarded with better rates and faster approvals.
April Dunn is a Mortgage Broker who has been assisting clients to purchase, refinance or renew their mortgages for over 25 years. April is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects and specializes in Strategic Mortgage Planning. April provides a full range of residential and commercial mortgage financing for clients all over the province of British Columbia and across Canada through the Mortgage Architects network. April can be reached at 888-561-2679 or april.dunn@mtgarc.ca