Some of these tips may be common sense, but you would be surprised at how many files come across my desk where just a few simple steps could have significantly improved the client’s credit score.
Building your credit score is not instant. It takes time and consistency, but it’s easier than you think, don’t wait, get started now.
Here are a few tips to get your credit back on track or if your credit is already good making it excellent!
1) This seems like a no-brainer .. but ….pay your bills on time! Set a date every month (or twice a month) that you consistently pay. Paying bills as they come in is not an effective strategy and you could potentially miss a payment or payments. Take advantage of pre-authorized debits and equalized payments offered by most lenders and utility companies. For example if you know your $5,000 visa is going to to have a max payment of $42 per month, make that automatic bill payment for $100 on a set day coinciding with your pay schedule. Pay as much as you can/want but at least you know a regular payment is made.
2) You need at least two active major trade lines to get a traditional mortgage (over $5,000) but that’s all you need. I suggest you keep a visa and Master card and maybe a line of credit. Stay away from retail cards (home depot, future shop, sears..etc). If you have a car loan over $5,000 that is considered a major trade line.
3) Keep your balances low! The lower your balances the better your score! Now I am not saying don’t use your cards at all because some activity is actually good but try and pay off all or most of your balances by month’s end. Stop thinking of your credit card as ‘free’ money. If you don’t have the money in the bank….you probably shouldn’t spend it….
4) Don’t be a credit seeker! I always get the raised eyebrow treatment from my banker when I say, please don’t pull my credit. The fact is you have to ask, watch what you sign and limit the amount of inquiries on your bureau to an ABSOLUTE MINIMUM. If you have to put a small deposit for a utility or cell phone bill, just cough it up, it’s better than an inquiry.
5) If you have any collections, closed or inactive accounts pay or settle them ASAP. The only exception is if you are close to the 6 year mark of last activity (items purge after 6 years). Get them dealt with. It can usually be explained and mitigated if the account is paid, you have other creditors in good standing and some time has passed.
6) Finally .. HIRE AN EXPERT…most people don’t know this but there are professionals who all they do is help you keep your credit in tip-top shape. For a small fee, these guys will stay on top of your credit for you, give you valuable advise, guidance and even help set you up with credit building products. Check out Canada Credit Fix for more info.
Even if you have bad or marginal credit, I can still assist you in getting a mortgage, however, you will have less options and likely a higher rate. Credit scores range from 400-900, above 680 is considered ‘Good’, 750 and up ‘Excellent’. Check your score regularly by signing up with Equifax Canada, trans-union or hire an expert. You’ll be glad you did!
Alex Khalil
Mortgage Specialist
Mortgage Evolution Yaletown
C. 604-367-7880 – F. 888-377-7510
www.vanmortgage.ca
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