Buying a home is a big decision. Many factors such as a good credit history, a stable source of income, down payment, and closing costs play a big role to buy a house. In this blog, we would mostly focus on how to earn a good credit score and what should be an ideal credit score to secure a mortgage.
If your credit score is 620 or higher, you can take step to purchase a house. However, the higher credit score you have on your credit report, the more options you get for better interest rates. As a result, you can save thousands of dollars in the long run if you have best interest rates.
To get an idea of where you stand on a credit rating, you can opt for Equifax Canada Bureau and Transunion Canada Bureau. These Bureaus are accredited agencies for checking your credit score.
How can you earn a good credit history?
1. Increase the length of your credit history – The more length of your credit history is, the more lenders you can get access to. Along with that, lenders want to make sure your credit history is accountable to lend you money, and they also want to make sure you are paying your other debt obligations such as a car loan payment, credit card loan, and all other debts on time. Also, if your credit card is new then it will discourage most of the mortgagees to approve you for a mortgage loan. To get the best interest rates, length of your credit history is crucial.
2. Utilize your credit card limit 30% or below- To earn a good credit history, better keep in mind, you should use your credit card up to 30 % or less. Let us say, you have two credit cards with limit $5000 and $3,000, respectively. If you want your credit report should reflect a good credit score, then your usage might be $2,400 ($5000+$3000*30%).
3. Avoid numerous inquiries on your credit report- If lenders see many inquiries in a short time of period, then it is not a good sign for them to lend you money. They might think you have opened various credit accounts, and you need money to pay your bills.
There are two types of inquiries- one is Hard inquiry, and another is soft inquiry. A hard inquiry occurs when you apply for a new credit card or a credit line. This record impacts your credit history for at least 2 years, but its effect lessens with the passage of time.
On the other hand, soft inquiries occur when you check your score yourself or if insurance companies check your credit history for pre-approval. Indeed, to keep your score intact, you should avoid credit score check repeatedly. If you do not follow the guidelines, then it can jeopardize your credit score.
4. Show variety of credit products on your credit report- If your credit report reflects diversity of credit products in the terms of credit card, a line of credit, loans, then it might boost up a potential lender’s confidence to lend you money, as they can consider you are able to make more than one payments. Mortgage professional can help you to go through the process and can guide you, what are the steps should be taken to get a good credit history.
5. Make sure your credit history shows no bankruptcy, and delinquencies- if your credit history shows payment arrears, derogatory, then it is not a good impression on your potential lenders. They would think you are not financially prepared to pay the loan or may be in the future, if you continue repeating this behavior then it can become a financial dilemma for them. As a result, it can impact their mind negatively, and you can lose the opportunity to secure a mortgage loan.
6. Are you fully prepared to secure a mortgage?
Before you take a step to become a homeowner, ask a couple of questions to yourself- do you have a down payment? Do you have a good credit history or a stable source of income? Do you have 1.5-4% savings of your mortgage amount to pay the appraisal fee, legal fees, inspection fee, land transfer tax fee, etc.? Do you have income to pay the property taxes? If the answer is yes, you can take a step ahead confidently to buy a house.
These questions are must to ask yourself, as we have observed, sometimes, potential buyers are in rush to purchase a house, they never realize the above-mentioned extra costs. Also, life is unpredictable, sometimes, you can face life-altering traumas, which can take away your capability of making monthly payments or can jeopardize your credit history as well. That is why, patience and guidelines are crucial to protect yourself from the unwanted losses. You can always contact us for a no obligation free assessment of your financial and credit evaluation.
Why choose us-
As a leading Mortgage Brokerage, we have strong relations with multiple banks and numerous lenders. We work with Canada’s leading lenders to provide you a mortgage solution that fits your budget. Our mortgage and financing process is amazingly simple, we represent you and match you with the best suited mortgage as per your needs. This way we can guide you through this complicated process with our years of mortgage financing experience.
• We are dedicated and professional Accredited Mortgage Brokers in GTA.
• We are well trained and have experience in the mortgage financing field more than 10 years.
• We can shop around with different lenders to get you the best possible mortgage rates and conditions as well.
• We have different options for different income and credit level with access to number of private lenders to suit borrower’s needs.
We are a professional mortgage broker in GTA. We can help you secure a mortgage with best mortgage interest rates. We are located at 2 County Court Blvd., Suite # 438, Brampton, ON L6W 3W8. Call MB Mortgages Inc. today at 905-458-6929/416-939-7131 for your queries or you can email us at: [email protected] or you can visit our website at www.mbmortgages.ca
The information provided in this blog post is intended to provide general information. You should consult with a mortgage professional to fully determine the scope of your situation. MB Mortgages shall not be held liable from usage of the information provided on this page. Individual situation may vary.