Many of us don’t seem to be aware of or understand the importance of maintaining a good credit score and how it effects our lives. A credit score is a three digit number that becomes a crucial element when you apply to get an approval for a mortgage to buy a home, or a loan to buy a car or just simply a credit card/loan.
Checking your credit score from time to time, to ensure that your credit is in good standing is important. A credit score of 650 + is considered as a good credit rating for individuals looking to borrow. Requests for free credit reports from Equifax can be made by completing and sending a credit report request form.
As mortgage agents, when potential borrowers make initial contact with us for a mortgage, refinance or renewal, we are compelled to run credit checks as a standard practice, to ensure that these potential borrowers have adequate credit to pre-qualify to obtain mortgage funding.
Here are 5 simple ways that will help you to safeguard your credit score and improve your credit:
1. Pay on time, every time, in full
Set up direct debit payments with your bank to ensure that payments are made in full and on time, every time. Late payments and partial payments will result in harming your credit score in the long run.
2. Keep your balances at a minimum
If you have already accumulated a substantial amount of debt, it is advisable to look at paying some of those debts off before you take on more.
3. Work on your long game
The route to establishing credit is through your credit history. Therefore keeping at least one active credit card and maintaining good credit standing over a period of time will help build your credit history.
4. Limit the number of credit cards
While your ultimate goal is to establish credit and maintaining good credit, it is also important that you limit the numbers of credit cards you sign up for. Potential lenders like to see that borrowers are stable and have maintained credit worthiness over time.
5. Maintain a variety of loans
As potential borrowers maintaining a variety of different types of credit such as mortgages, student loans and credit cards, will demonstrate your credit worthiness.
A great article published by Huffington Post highlights the importance of maintaining good credit scores.
Please contact the team at MiMortgage.ca if you are in need of advice on how you can plan your finances or build your credit.
