Let's talk about CREDIT SCORES
Wednesday May 15th, 2019Share
Lets talk about CREDIT SCORES
Your credit score is an important factor in determining how much home you can buy. In fact the health of your credit score can be the difference of your getting approved or denied for various credit products. A healthy credit score will help you gain access to better interest rates
WHAT QUALIFIES as good credit?
In Canada, credit scores range anywhere from 300 to 900. The higher your credit score is, the better your chances are of getting approved for various loans and other credit products. Generally speaking, a score of 650 and above is considered good and means that you are a low default risk and a better candidate for lending. A credit score of 750 or higher is deemed as excellent. In many cases, a minimum score of 680 is required for mortgage approval from most A-lenders, like banks and other traditional financial institutions. Unfortunately, a credit score of 600 or under is considered low, meaning you are a higher risk to lenders.
HOW TO IMPROVE YOUR CREDIT SCORE
-Pay bills on time and in full
-Don’t carry a large amount of unpaid debt
-Don’t apply for too much new credit
-Increase length of credit history- the longer you have a credit account open and in use the better it is for your score.
-Do a soft check on your credit at least once a year. Limit the amount of ‘hard’ checks you do. Only request a hard credit check if it is necessary.
CAN I GET A MORTGAGE IF MY CREDIT SCORE IS LOW?
Most banks will not consider mortgage approval for potential borrowers that have a credit score under 680. That might cause you to look at your score of 670 and get discouraged. However, one important thing to understand is that every lender’s specifications and approval criteria are different. Banks, for example, are stricter businesses that must uphold to certain standards. But again, there are many types of lenders out there that grant mortgages, like trust companies, credit unions, and private mortgage lenders, many of which cater to borrowers with lower credit scores.