Getting approved for a loan nowadays can be a real challenge, especially with real estate prices constantly rising. In Canada, for instance, the house you pay $700K this year could have been bought at nearly $100K less the year before. So unless you run a multi-million dollar company and rolling in a lot of cash, there are a lot of arrangements to be made on your financial front when buying a home.
Your lenders are going to look at several factors when assessing you for a mortgage – your age, down payment amount, income source, employment stability, and more. The most significant qualification factor of all would be your credit score, an indication of your current financial health, and proof of your responsibility when using credits.
Your credit history speaks of your financial worthiness. So, the better you score, the easier you find lenders’ support and get approved for new loans. This three-digit number becomes your gateway to the best mortgage programs with the lowest possible interest rates. In case you are wondering what qualifies as a good credit score, any digit beyond 660 does. A score above 760 is excellent.
Now, let us dive into some tips to achieve a better credit score –
- Make Timely Payments
This can sound too obvious, but worth stressing each time, you are not supposed to miss your EMIs or delay your credit card payments. Being busy in your routine shouldn’t be an excuse because such liabilities directly impact your credit report. Not only will you have to face a heavy penalty, but it also hurt your score. So, set reminders and be disciplined to tackle them on time.
Not only will you have to face a heavy penalty, but it also hurt your score. So, set reminders and be disciplined to tackle them on time.
- Maintain Older Credit Cards
You don’t have to apply for new and multiple credit cards unless the finances related to the older ones are going sound and robust. If you pay your bills and payments in full, without defaulting a single payment, continue maintaining that card. It helps to build a lengthy and reliable history, thereby boosting your credit scores and chances of getting quick mortgage approval.
- Limit Your Credit Usage
You must use your credit card smartly. Avoid going overboard and applying for too much debt in one go. Keep a tab on how many loans you apply in a year and try to repay the first before applying for the next. If you burden yourself with multiple liabilities, there are sure-shot chances of missing payments on one or the other and having your credit score crashing down.
- Review and Rectify Your Credit Report
If you are a first-time home buyer and planning for the purchase anytime soon, you must find out your current credit score and set off on the path of rectifying it. Do that once a year and check what factors seem to be affecting it. Identify any errors and update the details as required. At times, you may have repaid the loan, but it is not mentioned in the record. So, to keep the negative impact away, fix the omission instantly.