When it comes to securing a great mortgage loan at an even better interest rate, good credit is key. Boost your credit quickly and effectively with the help of these seven tips:
1. Review Your Credit Report
Start by getting a copy of your credit report and be sure to check for errors (debts that aren’t yours or have already been paid off, incorrect payment history or someone else’s information, for example). Be sure to dispute any errors you find.
Note: Canadian credit score ranges are as follows:
Poor: 300 - 559
Fair: 560 - 659
Good: 660 - 724
Very Good: 725 - 759
Excellent: 760 – 900
2. Focus on Biggest Debts First
In the event you have multiple cards or credit accounts, be sure to start with the biggest balances. Since your current debt load accounts for 30% of your score total, tackling larger debts first is a great strategy for bringing down your credit utilization rate.
3. Pay More Than the Minimum
Paying more than the minimum (even if it's just a little) won’t just help you pay down your debts faster (putting you on the fast track to credit success), but it will also help you save on interest, potentially by hundreds (or thousands) of dollars.
4. Don’t Apply For Any New Credit…
Try to avoid opening any new accounts. While new cards or loans may improve your overall credit limit, too many hard inquiries can work against you - ultimately affecting your score (negatively) for upwards of a year or more.
5. …But Don’t Close Unused Accounts
Closing unused cards can also negatively impact your credit. Older (unused) accounts are especially important for establishing a lengthier credit history (the longer, the better). Closing cards may also affect your credit utilization ratio, thereby lowering your score. Just be sure you’re not paying any annual fees as a result.
6. Set Up Automatic Payments
Your payment history accounts for the majority of your total score (35%). For this reason, infrequent, missed or late payments can be extremely damaging to your credit health. Set up automatic payments for cards, student loans, car loans, etc., to ensure you pay on time, every time.
7. Use Credit More
While it may seem counterintuitive, regularly using your credit can help boost your score faster. The key is to pay your balances off quickly, establishing a regular payment pattern that shows you’re able to manage your credit responsibly.
Whether you’re thinking about buying a new home or simply looking for a better mortgage rate, we can help! Quick and easy, our online application form only takes a few moments to complete, and we’ll get back to you soon.
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