Your credit rating is a reflection of the amount of money you have borrowed from various creditors as well as your repayment history. Having a good well-established credit rating, or at least fair one, is essential to securing a mortgage loan. Your credit rating score is kept by the credit bureau and reflects loans, payments, etc., that you have made during the past seven years.
Both positive and negative information is recorded on your credit report, so if you want to qualify for a loan you need to be sure to build a good credit history. There are a few simple rules you need to follow if you want to protect your credit rating:
- Pay your bills on time.
- Limit what you borrow to what you can afford and need.
- Loans need to be repaid on time and quickly.
- Review your credit report at least once a year.
Remember, a request for a loan can be refused on information contained in your credit report so it is important that you review periodically for errors and/or missing information. If you are getting ready to apply for a mortgage loan, it is a good idea to check your credit by contacting your local credit bureau. You can obtain a copy of your report for no or little charge.
If you are unfamiliar or unsure about what your particular credit score means, Ratestead.ca has a Credit Score Rating Tool that will help you determine where you rank and its impact on the interest rates available to you. Even a poor credit rating doesn’t mean you can’t qualify for a mortgage loan, but it probably means you are going to be paying a higher interest rate. For those with lower credit scores, hiring a mortgage broker can be an excellent way of finding the lowest interest rate available.