Understanding Your Credit Score

2022-08-04 | 07:04:02

One of the important factors in home ownership is understanding things like your credit score. While most people don’t really stop to think about this number, it becomes vastly more important if you are looking to purchase a home! In fact, your credit score is one of the most important factors when it comes to qualifying for a mortgage at the best rate – and with the most purchasing power. You can find out what your credit score is by ordering a credit report. These can be done through your mortgage professional or directly via Equifax Canada and TransUnion Canada. The credit report itself is simply a listing of all of your mortgage and consumer debt. Each time you borrow money, or make a payment on a loan or credit card, the lender then reports the information about the transaction to these agencies. In addition to credit information, you will also find liens and judgments on your credit report as well as your address and possibly your work history. The accumulation of all of this information is called your credit report. The information on your credit report varies based on your creditors and what they have reported about you. Potential lenders and others, such as employers, view your credit history as a reflection of your character. This number essentially lets lenders and other companies know the type of spender you are and your financial habits. This tells lenders whether or not you would be a safe investment, thereby determining what you qualify for when it comes to your mortgage. Credit scores range from 300 to 900, the higher your credit score the better. Ideally, you should be aiming for a credit score of 680 for at least one borrower (or guarantor), especially if you are putting under 20% down. If you are able to make a larger down payment of 20% or more, then a score of 680 is not required. When it comes to your credit score, it is important to understand that this is not set in stone. If you are looking at your credit report and wondering how to improve your credit score, there are many ways to do so such as through paying down household debt, reducing the number of credit cards and loan applications you submit, staying within your credit limits and paying your monthly bills on time. If you are looking to purchase a home in the near future and have any questions about your credit score, please don’t hesitate to reach out to me today! I’d be happy to help you obtain a copy of this report and go through it with you to verify that all of the information is true and correct, as well as discuss ways to improve if needed.

If you have questions about your credit score, reach out and let's have a conversation.

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