A bad credit rating can be gut-wrenching and humiliating ... we have options!

Since most of us cannot afford to pay cash for a home, mortgages become necessary to raise the appropriate amount of funds for a purchase. Credit Score is a major determining factor in lenders deciding whether you get the best mortgage rate or a no on your mortgage application. If you are preparing to buy a new home, here are a few tips to make sure credit score will not hamper your home buying plans.

1. A person needs active trade lines to get a credit score. Trade lines can be credit cards, lines of credit, loans, car leases etc. Most mortgages do not show up on your credit bureau and thus mortgage payments do not increase your score! You must borrow to create a history of your habits of repaying debt! Use the credit you have regularly to maintain a credit history. 0 credit use diminishes trustworthiness in eyes of the credit bureau. Make a habit of making 1 small purchase per month on at least 1 credit card.

2. Obtain at least 2 credit cards with a total $2500 max limit sum between them. Under $2500, the lender may not take the credit card activity seriously. Consider credit cards at a store you don't shop at, or a gas card if you are worried about over spending.

3. Pay bills on time. Late, missed and unpaid bills lower your score.

4. Think twice about allowing someone to credit check you...multiple checks lowers your score...makes you look like you NEED money. Not to mention, not all credit checks are equal - "B" lenders may drop your score more than "A" lenders!

5. Never max credit cards etc...stay below 30% of card limit for the best score and below 50% for next best score. High balances lower your score.

6. Treat credit like an asset which can maximize your buying power.

Mortgage Brokers are excellent sources of information on Credit Reports and tips on building your credit score. Call 250.682.6077 or email steve.bucher@migroup.ca for advice to match your situation. We are always happy to help. For more information, check out the links below: