Knowing Your Credit Score
Do you know your credit score? Many Canadians don't regularly check or even know their credit scores. However, it's crucial to be aware of your credit score when looking to purchase a property. Here are some topics to keep in mind.
Obtain your credit score
Obtain your credit score through Equifax or TransUnion. Be sure to review the report to ensure all the information is accurate. If you need assistance, consider consulting a financial advisor.
Pay your bills
Paying your bills might seem straightforward, but it becomes even easier with the right mindset.
Timely bill payments are essential for maintaining a high credit score. A consistent payment history and avoiding late payments are among the most significant factors influencing your credit score.
Managing credit card limit
Managing your credit card limits effectively involves keeping an eye on your utilization ratio. Ideally, you should maintain your utilization below 30%. High credit card balances can negatively impact your credit score.
Avoid having your credit checked
Applying for multiple accounts or loans in a short time span can significantly impact your credit score. To maintain your creditworthiness, it's best to avoid opening new accounts during the property buying process.
Don't cancel old accounts
While it may seem wise to cancel unused accounts to improve your credit score, doing so can actually hurt it. Keeping accounts open helps maintain a long history of on-time payments, which can potentially boost your credit score.
Conclusion
Knowing your credit score and monitoring it regularly is the first step to improving it. Staying on top of your bill payments and avoiding late payments are crucial. Remember, credit scores don't change overnight—be patient and disciplined with your spending habits. Pre-approvals for a mortgage depend on maintaining good credit and are typically valid for 30, 60, or even 120 days, depending on the lender.
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