The job of a Mortgage Professional is to provide our customers with unbiased mortgage options and professional financial advice. Knowledge of the lender guideline and and providing the best available interest rates is a very important part of our job. Giving professional financial advice on how to build and maintain a high credit score is another important part.
When applying for a mortgage, having a high credit score (680+) is just as critical as having sufficient income or down payment. With the recent government imposed rule changes, it has become more difficult than ever to get your mortgage approved. A low or bruised credit score, can mean the difference between getting the home of your dreams, or being forced to downgrade your search due to low credit score qualifying restrictions. Having a bruised score can lead to the applicant accepting a higher interest rate or paying lender fees. In extreme cases, having a low or bruised credit score can prevent a mortgage from being approved altogether.
During the pre-qualification process, we review our client’s credit bureau(s) and inform our clients of the strengths and weaknesses of their credit report. We give our advice (if needed) as to what steps can be taken to put them in the best position to get their mortgage approved. purchase or refinance.
Your Credit Score is determined by 5 major factors; limit of credit available, time reporting, amount extended, repayment history and any outstanding collections.
- Amount of Credit Available
- – Referrers to the total amount of credit lines available and their respective credit limits. This includes any one or all of the following, Credit Cards, Personal Lines of Credit, Home Equity Lines of Credit, Car Loans, RRSP Loans, Mortgages etc.
- Time Reporting On Bureau – This refers to the length of time the credit lines have been reporting on the credit bureau. The more time with credit reporting on the credit bureau, the more comfortable the lender is with the ability to repay debt.
- How Much Credit Has Been Extended – Using credit lines and keeping a balance for an extended period (60 days or longer) will begin to register negatively and will begin to pull the credit score down. Our suggestion is to try to keep credit balances below 50% of the limit and make the minimum monthly payment if paying it off is not possible. If you happen to use more than this, not to worry, it will only begin to act negatively if you hold large balances on your credit for more than a month or two.
- How It Has been Paid – Is probably the most important factor when determining your credit score. Each revolving or installment credit line has a score of 1 through 9. A 1 score means it is current and in good standing. A 2 score is 30 days late, a 3 score is 60 days late and continues right through to 9. If your score for any credit line is above 1, this is reflected as a negative and your score will begin to go down.
- Outstanding Collections – A collection is any unpaid bill sent to a collection agency for repayment. If the bill remains unpaid, the collection agency will then register the debt on the credit bureau. If it is not paid, the collection will continue to report indefinitely. Any collection reporting on the credit bureau negatively effects the credit score.
Here at the Mortgage Professionals, we provide more than just the lowest rate. It is our goal to make each and every one of our clients, a client for life. We do this by providing professional financial advice and proven strategies to get our clients approved at the best rate available on the market.
Our advice regarding for building and maintaining a high credit score is to; apply for credit early, use it moderately and best practice is to pay the balance monthly.
If you have questions about your credit score, how to build your credit or repair your score. Feel free to contact me for more details.
Darcy Doyle – Mortgage Professional
Darcy Doyle Mortgage Professional Team
604 889 7343