Your credit report and score are important tools for obtaining a loan of any kind, including a mortgage. So, it’s in your best interest to understand what your credit report is and what is on it.
There are two major credit bureaus in Canada- Equifax and TransUnionCanada. It’s advisable to get a copy of your credit report at least once a year to make sure all the information is correct. Both agencies receive a lot of data each month from banks, finance companies, credit unions, retailers – just about everyone who grants credit – so it’s easy to see how mistakes could be made.
The major sections include your personal identification, a consumer statement, credit information, public record information, third-party collections and enquiries.
First and foremost, it’s important to make sure your identification information is accurate. Second, to better your chance of getting approved for a mortgage, your credit information, which shows your payment history, should not exceed 30% of all the credit you have been allowed. For example, if you have credit cards or lines of credit with available credit of $10,000, make sure you have only used $3,000. Third-party collections also need to be cleared up before applying for a mortgage.
And finally, limit your enquiries by not applying for too much credit before seeking a mortgage. Too many enquiries will lower your score. It is also important not to shop from bank to bank, each bank will pull a Credit Report and this alone will lower your credit score, whereas if you deal with a Mortgage Broker, only one Credit Report will be obtained to present to numerous banks and trust companies.
To get a free copy of your credit report, go online at www.equifax.ca and follow the instruction.
Sky Financial Corporation