When it’s time to buy a home, checking your credit score is often the one thing that causes the most anxiety for my clients. I completely understand that it can be very overwhelming--especially if you don’t even know what your credit score is--to take this important step towards home ownership. The good news is that, no matter what your credit score may be, there’s a lot of simple things that you can do to improve it.
1. Find Out Your Credit Score
Knowledge is power, and it’s important to find out what your credit score actually is in order to know what steps you can take to improve your score. You can order your credit score report online at www.equifax.ca, and it only takes a few minutes to complete the application form.
2. Educate Yourself
Good credit helps when it comes to getting the best mortgage rates, but many of my clients believe that a low credit score automatically means that they will not get approved for home financing, but that’s not always the case. Lending rules are always changing and they are based on a “big picture” approach which takes into account many factors, only one of which is your credit score. If you discover that your credit score isn't as high as you’d like it to be, first speak with a mortgage broker to see what your lending options are, before spending any time worrying!
3. Ask a Professional
A good mortgage broker will also be able to educate you on a few simple steps to improving your credit score, based on what they find. Oftentimes, my clients find that they didn't realize how easy it can to do those little things that make a difference, like paying at least the minimum payment on their monthly credit card bill or not filling out too many credit applications.
4. Make an Action Plan
Improving your credit score can be like eating an elephant one bite at a time. Once you find out what steps you can take to better your credit score, plan out a realistic course of action for yourself. You can work with a professional to help you develop this plan, or simply chart out all the things you want to improve and then prioritize the tasks which are 1) the easiest to do and 2) will make the most difference. Be sure to have any errors fix and remember that time is your best asset when it comes to credit, so the sooner you begin establishing a good track record, the better.