The better your credit rating, the easier it is to obtain financing. So what constitutes a good credit score and how can you improve or keep your credit score above average?
- Pay your bills on time
Typically items such as your credit cards and personal loans will show up on your credit report while utility bills are usually absent. Cellular companies may report late payments to your bureau so at the very least pay the minimum amount required by the due date. If you know you are unable to make at least the minimum payment prior to the due date, call customer service and let them know as they should put a note on your file which will hopefully avoid any dings to your credit report. Communication is key! - Keep your balances well below the limit
If you can keep your credit card and loan balances under 50% of the limit, this is a good starting point. Ideally the magic number is to keep your balance at no more than 30% of the limit and by no means should you exceed the limit at any time as it will hurt your score. - Try to manage revolving credit and instalment loans
Revolving credit refers to credit cards and managing these will ensure your score is maintained in the above average category. Instalment loans refers to a car loan or other personal loan; this will demonstrate that you are responsible and can pay back your loans easily. If you are having troubles obtaining a credit card because you may be new to the country or have had some credit issues in the past, then you can ask your lending institution to sign you up for a secured visa card. This is a visa card that is secured to your bank account so that you are unable to draw more than what you currently have in cash. It's a great way to improve your credit and get you back on track! - We all love shopping but limit the number of credit applications you make
If you have your credit accessed numerous times over a certain period, this could raise concerns with the credit reporting companies as they feel that you are attempting to search out numerous avenues to obtain credit. If you make these enquiries in a short period of time, they can usually equate that multiple enquiries are related to the same potential loan. - Age before beauty
The oldest credit card that you own holds the most weight when establishing a good score. Even if you use it a few times throughout the year and pay the balance off in full, it's a good thing. If you are considering consolidating some of your cards, try to hold on to the old ones and depart with the new ones.
If you follow these simple rules, your credit score will be maintained, repaired or established in no time. Make your payments on time and if you are unable to do so, contact the agency to let them know that your payment will be delayed. Keep your balances below half of the limit and only access your credit when required.
A target beacon score which is the number that is associated with your credit report is 680 as a minimum. This will allow access to the discounted rates on the marketplace. To access a free version of your credit report, please click the link below. For an additional fee of $23.95 you will be able to obtain your full report which includes your beacon score.
Check your credit: Equifax
As always, I encourage you to contact me if you have any questions with your current mortgage or are looking for one. Please find me on facebook at facebook.com/jnmortgages and on twitter @jasonmortgages.
Jason Nesseth with TMG The Mortgage Group Canada Inc. If you have any questions or comments about this blog, please feel free to call Jason at 604.375.7375, email jason.n@mortgagegroup.com or visit his website at jasonnesseth.com