Looking for your dream house? Or have other investment plans? When looking at the mortgage process one factor is that your credit is in good standing. This will help get approved with a better mortgage rate. However, if your credit is lower and need to improve it, here’s some tips:
- Fix credit report errors – Review your credit report or have it reviewed by a professional. If you think something is not correct, then you may want to dispute them. You want to make sure no one else has stolen your identity, there nothing outstanding or missed payments. You can call the credit bureau agencies directly. The main ones are Equifax and Transunion.
- Pay down your debt – This will help qualify you for your mortgage. Mortgage broker Kuljit Chhaitra from South Surrey Mortgage says “lenders will review your assets and liabilities looking at how much income you bring compared to the debt you have to service. This will change your debt servicing ratio’s”. Paying down your debt will increase your chances to qualify for your dream house.
- Stay on a budget – If you are able to do not overspend and avoid new debt. You may be tempted to buy something which you can buy later such as a car. Get your mortgage approved first.
- Do not close old accounts – Paying of credit cards are great! However, closing cards that you do not use may not be the best idea. This may affect your credit depending on how its reported to your credit. Keeping these accounts builds your credit history and credit score.
- Credit utilization ratio – This how much you used your credit compared to how much is available. If you spend more than 75% of your available credit, then likely this will lower your credit score. If you spend less than 50% of the credit, it will help improve your credit. For example, if your limit is $1000 and you spend $500, that would be 50% utilized. Thus, the lower the ratio, the better. You can always ask for a credit limit increase or you may already be approved for one.
- Credit hits – Multiple credit hits will lower your credit score. If you looking to buying a car, do not go to different dealers and pull credit. It’s better to wait until your mortgage is complete, then go buy your dream car!
- Card payments – Make your payments on time not after the due date. This way they will not report you are late. In addition, do not pay the card in full if your someone trying to develop your credit. Pay the minimum and more that way the balance revolves while it shows you are paying the balance down. For example, you may spend $100 and the minimum payment is $10. You could pay $30 every month until it is paid and use your card again. This will help build your credit.
These are some tips that can really assist if you’re looking to buying your dream home. Msg or Call Kuljit Chhaitra @ 604-374-5870 if you have any questions.