In today’s economic times of tightening lending markets, your credit history is increasingly more important when applying for a mortgage or loan. When a bank does your credit check, they do not provide a detailed analysis of your credit bureau and in most cases cannot even provide you with a copy. At Prolink Mortgages we will take the time and go through the credit bureau with you to ensure you understand the report as well as provide you with a copy of the report upon request. Also recent changes in the mortgage industry make it almost impossible to get mortgage financing with credit scores under 600 unless you are willing to pay a very high rate of interest. In some cases you even need a score above 650 to be considered for various mortgage programs such as rental or investment properties. By following these 8 simple rules, you will be ensured of the good credit score, mortgage and interest rate that you deserve.
1. Pay your bills on time. Your payment history is a major factor (35% of your score) in determining your credit score. If you pay your bills late, or had an account referred to collections, your credit score will take a major hit.
2. Sign up for online banking and make sure your regular recurring bills are paid automatically. This way you will not forget a payment that will wind up reducing your credit score.
3. Increase your credit limit. Another large factor is the amount of your debt in relation to your credit limit. If you have a card with a $10,000 credit limit and your balance is $9,000, this will not help to improve your score. To make the debt/credit limit ratio look better, you can try to call your credit card company and request an increase in your credit limit. Don't use the extra credit though! That defeats the whole purpose and puts you further in debt! A general rule of thumb is to try and keep the credit card balance below 50% of the credit card limit.
4. Don't apply for many cards at once. This will not improve your credit score because this is a characteristic of high credit risk groups.
5. Don't ever close an open credit card account. If you pay off a credit card down to a zero balance, leave it open. Remember that a positive factor for your credit score is how much available credit you have at your disposal when compared to your credit balance, in addition to the length of your credit history.
6. Apply for loans within a two-week period. Every time you request a loan and the lender pulls your credit report, it can hurt your score. It is part of the formula that reasons "this person is trying to apply for credit and loans and possibly be trying to live way beyond their means!" If you keep the loan process within a two-week period, all of the credit report lookups are bundled together as one single request!
7. Check for errors on your credit report. Examine your credit report for errors and contact the credit reporting agencies to fix any errors on your credit report.
8. For the credit card debt that you have outstanding, try and pay more than the minimum payments required. By paying more than the minimum payments, your credit score will increase because it shows that you are making an effort to pay down the credit card debt.
If you take action and follow these tips, you will be able to give your credit score an immediate boost and gradually increase the score even more as time passes. The major keys are to pay your bills on time and reduce your debt amounts when compared to your credit limit. This has a twofold benefit of improving your credit score and reducing your debt.
Don’t panic if you do a credit check and your credit score comes in lower than you expected. We will work with you and help to get your score increased. If you take our advice and suggestions, usually in as little as 60 days we can help you to increase your credit score to make your home ownership dreams a reality. Even if it takes longer than 60 days for your score to improve, we will continue to work with you over the long term to help in any way we can to get your credit on track.
Please contact us for your mortgage needs or for help with getting your credit on track to reach your future home ownership dreams. Betty at 403-532-3927, e-mail bsaskiw_prolink@telus.net, Kevin at 403-589-3021, kevsas@telus.net or at our website: www.yourmortgagecontact.com
