The Importance of Your Credit Rating



Before approving you for a mortgage, lenders will want to see how well you have paid your debts and bills in the past. To do this, they simply get a copy of your credit history (credit report) from a credit bureau. A lender will use this credit report to determine your credit worthiness. It includes information about your ability to handle your debt obligations; information on your financial past; your use of credit and your current outstanding obligations. Before your lender sees your credit history, you should get a copy for yourself to make sure the information is complete and accurate. Simply contact one of the two main credit-reporting agencies (Equifax Canada Inc. or TransUnion of Canada) to get a copy of your credit report. There is often a fee for this service.

Lack of Credit History

If you have no credit history, it is important to start building one by, for example, applying for a standard credit card with good interest rates and terms, making small purchases and paying your credit card balance as soon as the bill comes in.

Fixing a Credit Record

If you have bad credit, lenders might not want to give you a mortgage loan until you can re-establish a good credit history by making debt payments regularly and on time. Most unfavourable credit information, including bankruptcy, is dropped from your credit file after seven years. If you have bad credit, you may want to consider credit counselling.

Despite your poor credit history, you might still be able to get a mortgage loan if you have a relative such as a family member willing to be a guarantor or co-signer on the loan. This person must meet the lender's borrowing criteria, including good credit history, and is legally obligated to make the mortgage payments if you do not.

Tips to Improve Your Credit Rating:
· Pay down existing debt
· Postpone major purchases until you can afford to buy them without creating more debt.
· Use credit carefully and establish a solid track record of consistent, timely payments.
· Don’t miss bill payments
· Don’t default on payments

The information contained herein is accurate at time of printing and is copyright Bruce Witchel 2015.
For further information on real estate matters, please contact Bruce at 416-WITCHEL 416-948-2435 or by email at Bruce @ BruceWitchel.com.
Bruce Witchel, Real Estate Agent
Mississauga, ON,
(416) 948-2435