Is your credit score holding you back from getting the home of your dreams? Are lenders withholding the best interest rates because of your credit rating? Having a strong credit score can unlock a lot of financial doors for you. On the other hand, a low score can hinder the mortgage solutions you’re offered. Here are some of the best practices you can use to improve your rating.
Pay Bills On Time
When you pay your bills on time, you’re building a good credit history, which can boost your score. It demonstrates to lenders that you are reliable and that you take your financial obligations seriously.
Only Use What You Need
How much credit you use sends a message to lenders about your default risk. Aim to have low usage of the credit you have, which is usually around 10 percent or less.
Check Your Credit Report Often
Mistakes can happen. Names can be misspelled, and other people’s information can make it onto your report, including their debt. Even debt that you’ve already paid can still appear on your report and hurt your credit score. Be sure to report any errors and have them corrected.
Avoid Collection
Avoiding debt payments until they end up at a collection agency is a bad idea if you want to have a good credit score. Collections and bankruptcy can make it difficult to recover your credit ranking.
Be Patient
It can take some time to increase your credit score. You’ll need to be patient and trust that it will be worth the wait.
Request Credit Increases
Occasionally request increases for your credit card limit, which will lower the utilization rate and look good on your credit report.
Pay Off Credit Card Balances
When paying off your credit card balances, start with the cards that have the highest balance first. Doing this will bring down your credit usage ratio and improve your debt-to-income ratio.
Mix Up Your Credit
While you should only apply for credit if you need it, having different types of credit products can positively impact your credit score. A mix of credit demonstrates that you can be trusted, and makes lenders more willing to work with you. This may include a credit card, vehicle loan, and line of credit.
Apply for Credit Cautiously
Every time you apply for credit, an inquiry is made and recorded on your credit report. Too many inquiries raise red flags for lenders. It may indicate that you are living beyond your means, which could make them question if they want to approve your application.
Your credit score can have a significant impact on the mortgage solutions that you’re offered. To get the best rates and terms, you’ll want to improve your score.
If you are interested in learning more about mortgage solutions in Ontario, call Northwood Mortgage at 888-492-3690 or contact us here.
