Considering a New Home Next Year? Start Now and Get a Jump on Improving Your Credit Score
Wednesday Nov 24th, 2021
What is a credit score?
If you’ve ever had any kind of credit, such as a credit card or a loan, you have a credit score. Simply put, a credit score is a three-digit statistical representation of your creditworthiness. Potential lenders such as banks, and landlords use credit scores to evaluate your ability to repay your debts and gauge your overall financial trustworthiness.
Canada’s two major credit reporting agencies, Equifax and TransUnion, calculate credit scores on a scale from 300 to 900. The higher your number, the better--the lower it is, the riskier you are in the eyes of the lenders.
Are you looking for a new home today?
If you want to get one immediately, it is crucial to ensure that your finances are all in order. This article will explore a few tips that can assist you in enhancing your credit score.
Grab A Fresh Copy
Firstly, seek a fresh copy of your credit report from any of the major agencies. According to the Fair Credit Reporting Act, you can access a free copy of your credit report once every 12 months. Hence, in case you did not seek a copy in the recent past, now is a good time. This free service can be accessed via AnnualCreditReport.com, which is a website that the Federal Trade Commission recommends.
Do remember that it is not a good idea to make use of a search engine to search for "free credit report" or other such terms. That is because there are several impostor websites that hope to obtain your personal financial information to scam you. Always opt for the government-recommended website that has been listed above.
Clean Up Anything Outstanding
With your copy of the credit report, you must go through each line and identify the various current as well as the outstanding accounts in the report. If any balances are owed, they must be in order and demonstrate how much you owe. Moreover, always flag mistakes or older debts that have been paid in full. In case your credit report has something that mustn’t be on it, get in touch with the reporting agency and inform them. When required, they will help you challenge the issue.
Pay Down Those High-Interest Debts
Lastly, prioritize your outstanding debts, which will assist you in paying them off easily. The essential debt payments include your mandatory minimums, which must be paid if you want to avoid being sent to a collection agency. Try paying off your debts in order of the highest interest rates first. If you pay them off quicker, your interest payments will be lesser over time. Furthermore, you can make use of that extra cash for paying your debts down further.
These are just some of the steps that can be undertaken to begin to start improving your credit score. Once you are ready to begin discussing a mortgage for your new home, get in touch with us. We will be glad to assist you with a mortgage offer that best aligns with your needs, budget, and credit.
Charissa Realty, for moments that matter.