Having good credit is essential, especially when it comes to getting a mortgage. Your credit score is a number that shows lenders how responsible you are with borrowing money. A good credit score can help you get better interest rates and more options for loans. But how do you keep your credit in good standing? Let’s break it down into simple steps anyone can follow.
What is a Credit Score?
Your credit score is a three-digit number that represents your creditworthiness, or how likely you are to pay back borrowed money. In Canada, credit scores range from 300 to 900. The higher your score, the better your credit. A good credit score is usually considered to be 650 and above.
Why is Good Credit Important?
Having good credit is important because it affects many areas of your life. It can determine whether you can get a mortgage, a car loan, or even a credit card. It also impacts the interest rates you pay, which can save or cost you a lot of money over time. Good credit can also be important for renting an apartment or even getting certain jobs.
Simple Tips to Keep Your Credit in Good Standing
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Pay Your Bills on Time
One of the most important things you can do to keep your credit in good shape is to pay all your bills on time. This includes credit cards, loans, utilities, and even your phone bill. Late payments can hurt your credit score.
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Keep Your Credit Card Balances Low
Try to use only a small portion of your available credit. For example, if you have a credit card with a $1,000 limit, try to keep your balance below $300. This shows that you’re using credit responsibly.
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Avoid Applying for Too Much Credit at Once
Each time you apply for a new credit card or loan, it creates a “hard inquiry” on your credit report, which can lower your score. Try to avoid applying for multiple credit products within a short period.
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Check Your Credit Report Regularly
Mistakes on your credit report can happen. Check your credit report at least once a year to make sure everything is correct. You can get a free copy of your credit report from the two main credit bureaus in Canada, Equifax and TransUnion.
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Don’t Close Old Credit Accounts
The length of your credit history affects your credit score. Even if you don’t use an old credit card, keeping the account open can help improve your credit score. Just make sure to avoid annual fees if possible.
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Manage Your Debts Wisely
If you have multiple debts, prioritize paying down the ones with the highest interest rates first. Try to make at least the minimum payments on all your debts to avoid penalties and damage to your credit.
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Keep a Mix of Credit Types
Having a mix of credit types, such as a credit card, a car loan, and a mortgage, can be beneficial. It shows lenders that you can manage different types of credit responsibly.
Call to Action: Let’s Talk Mortgages!
Keeping your credit in good standing is essential for your financial health and can make a big difference when it comes to getting a mortgage. Whether you’re looking to buy your first home, refinance, or explore other mortgage options, having good credit will open up more opportunities for you. If being self employed has impacted your credit read about self employed mortgages here: https://mortgagewithlyndsy.com/understanding-self-employed-mortgages-what-you-need-to-know/
Need advice on how to improve your credit or want to discuss your mortgage options? Contact me today, and I’ll help you navigate the best strategies to keep your credit strong and secure the right mortgage for your needs. You can reach out by phone or email. Lets talk mortgages.