SERVING Ontario - MOBILE
Phoebe Lam
Mortgage Architects - Radiance Mortgage
C (647) 981-9592   P (905) 597-7883
Email phoebe.lam@mtgarc.ca

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WHAT IS A CREDIT SCORE EXACTLY?

If you currently have a mortgage or looking to obtain one, it is imperative you maintain a healthy credit score.

The three digits that make up your credit score tell a lender a lot about your credit history and ultimately the status of your financial health. Essentially, lenders use the score to assess the risk you present as a potential borrower – which significantly impacts if and how much lenders are willing to let you borrow. Two reporting agencies Equifax and Transunion determine your credit score using a scale from 300 to 900. Higher scores on this scale indicate a healthy credit score and lower on the scale indicate more risk for the lender.

Credit Score Step 1

KNOW YOUR CREDIT HISTORY

Think it of us checking up on your health, your financial health. You can easily obtain your up-to-date credit report via the two credit reporting agencies – Equifax and TransUnion. When you receive your credit report you should check for errors or possible identity theft and/or fraud. Errors on your credit report can negatively impact your credit score and your ability to borrow.
Credit Score Step 2

PAY YOUR BILLS ON TIME

Your payment history is an important element of your credit score. Late payments to your loans and credit cards can and will lower your credit score. As a result, ensure you pay at least the minimum amount owing on time. In essence, keep up with payments to all bills not just loans and credit cards. Not only will it help you develop the right habit but it will ensure you credit score either remains good or improves.
Credit Score Step 3

KEEP YOUR BALANCES LOW

Even though you may have a $10,000 credit limit, it doesn’t mean it is a good idea to use it all. In fact the Financial Consumer Agency of Canada (FCAC) recommends consumers should keep a balance between 35-50% maximum of their credit limit. The closer you are to your maximum limit, the lower your credit score will go.
Credit Score Step 4

MAINTAIN A CREDIT HISTORY

It may seem as though it is better to stay away from all credit and loans in order to avoid a low credit score; however, the contrary is true. If you have no credit history at all, it will result in a low credit score because you have no record of paying any credit back. In essence, your ability to borrow and pay back cannot be measured. Therefore it is a good idea to obtain some sort of credit even a secured visa or low-limit credit card to build some credit history.
Credit Score Step 5

GET HELP

If you feel your spending is out of control and are having a difficult time managing your debt loads, do not be afraid to get help. Talk to your MA Broker today about credit counseling. It can help you:

  • Eliminate debts

  • Rebuild and increase credit ratings

  • Find financing alternatives

  • Improve cash flow management

  • Understand financial literacy

Having a good credit score goes along way in terms of your financial health and ability to borrow. Be responsible and be aware. Review your credit report annually, spend within your means, pay your bills on time, and do not hesitate to get help if your borrowing habits are out of control. Speak to your MA Broker today for more tips and strategies on improving your credit score and work your way towards mortgage qualifications.

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