Simple Ways To Increase Your Credit Score [Part 1]
Simple Ways To Increase Your Credit Score (Part 1)
Borrowers of good credit, generally with a score of 690 or higher, can offer more options for interest rates when it comes time to shop for an uninsured mortgage. Mortgage Broker Rosanna Younan has offered a few tips below on how to improve your personal credit score:
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Main factors used to calculate scores (in order of importance)
1. Payment history:
-bills paid on time
-missed or late payment: If payment is even 1 day after due date, it’s considered late &
the longer it takes to make a payment, the great the impact
-debt not paid/sent to collection/written off
-whether bankruptcy has been declared
-withholding payments due to dispute & lender reports as late
TIPS to IMPROVE:
-always make payment on time (even if it’s only the minimum payment due)
-contact lender immediately if you are having trouble paying – they might work out
repayment arrangement that won’t affect your credit score
2. Use of available credit:
-credit utilization is 2nd most important factor
-credit score is affected by how much of available credit you actually use (not the credit
limit)
-when a large percentage of credit limit is used, lenders see you as a greater risk – even
if balance is always paid off in full by due date!
TIPS to IMPROVE:
-try to use less than 35% of total available credit (based on total available credit on all
credit cards or line of credit)
-don’t use more than 75% of available credit on any one credit card or line of credit
3. Length of credit history:
-the longer the account is open, the better for your score
-score is lower if accounts are relatively new – don’t keep switching credit card providers
(ie: promotions that you transfer balances & get new card)
TIPS to IMPROVE:
-try to keep an old account open, even if you no longer use it; especially if there is no
annual fee
-use the account occasionally to keep it active
4.Number of Inquiries
-Inquiries on your credit report affect score (signed consent is required for a credit
inquiry but sometimes it’s in the fine print & you might not realize you’ve provided
consent)
-too many inquiries may concern lenders.....may appear you are desperately seeking
credit / living beyond means
TIPS to IMPROVE:
-limit number of times you apply for credit in a short time period
-seek credit when you need it
-seek credit when you qualify: ie: If you can qualify for a line of credit – arrange for one
even though you don’t need to use it (available for emergency purposes/safety net)
-for car loans & mortgages: shop around within a 30 day period as usually these
inquiries are combined as 1.
5.Types of Credit
-score may be lower if you have only 1 type of credit
TIPS to IMPROVE
-have a mix of credit: ie: bank credit card; store credit card; auto loan or lease; line of
credit
-don’t go crazy but have a mix.
Source: http://www.fcac-acfc.gc.ca/Eng/resources/publications/creditLoans/Pages/home-
accueil.aspx
Need mortgage advice? Contact Rosanna Younan.
Rosanna Younan
Mortgage Agent
License # M08004328
Verico Premiere Mortgage Centre Inc. #10317
Independently Owned & Operated
www.mortgageweb.ca/rosannayounan
C: 416 729 9210
Related post:
What documents do I need before getting a pre-approval?
