Here’s your roadmap to building and maintaining stellar credit for that dream home:
- Check Your Credit Report:
Like a financial compass, your credit report provides a snapshot of your borrowing history. It’s vital to review it regularly for errors that could be dragging down your score. You’re entitled to a free credit report from each bureau annually. Be sure to obtain reports from Canada’s 2 major bureaus: Equifax, TransUnion (there are other companies that draw their date from these 2 main bureaus).
- Be a Payment Superhero:
On-time payments are the ultimate credit score boosters! This applies to everything from credit cards and loans to utilities and phone bills. Even a single missed payment can significantly impact your score. Set up autopay or calendar reminders to ensure you never miss a due date.
- Don’t Max Out Your Credit Cards:
While credit cards are a great tool for building credit, using them excessively can backfire. Ideally, you should only utilize around 30% of your available credit limit. This demonstrates responsible credit management to lenders.
- Age is an Advantage (For Credit, Not You):
The longer you’ve had credit accounts open and managed responsibly, the better. So, avoid closing old credit cards unless they have annual fees or high interest rates. A mix of credit types (credit cards, installment loans) can also strengthen your score.
- Fix Errors, Fast:
If you find any discrepancies on your credit report, dispute them immediately. Contact the credit bureau and the creditor who provided the information to initiate the correction process. Be persistent – it can take time to resolve errors.
Building from Scratch? Here’s Your Credit-Building Toolkit:
Secured Credit Cards: These require a security deposit that serves as your credit limit. Responsible use can translate to a traditional credit card down the line.
Become an Authorized User: Getting added as an authorized user on a responsible family member or friend’s credit card can piggyback on their positive payment history.
Maintaining Your Credit Strength:
Monitor Your Credit Regularly: Stay on top of your credit score and report by requesting free annual reports or using credit monitoring services.
Limit New Credit Inquiries: Applying for multiple loans or credit cards in a short period can negatively impact your score. Space out credit applications.
Remember: Building and maintaining good credit takes time and discipline. By following these steps, you’ll be well on your way to unlocking the door to your dream home!
Do you feel ready to take the dive into mortgages? Contact us today.
