Credit missteps can ruin your chances of a mortgage
When it comes time to apply for mortgages, your credit report is very important, but how often are you checking your credit report otherwise? A simple credit error can ruin your chances at a mortgage, so it’s important to understand what really affects your credit, and be on top of your credit rating often. A perfect example of an innocent misstep affecting someone’s credit negatively, was illustrated recently in the Globe and Mail. As per the story, someone’s credit report was damaged due to an overdue phone bill, which after a month of not being paid was sent to collections.
Many people may not even realize that their phone bills affect their credit, which is why diligence is key and understanding what can affect your credit will only be an asset to you.
If you’re applying for a mortgage, missing a cellphone bill can sometimes kill an approval. In my case, the collection knocked my credit score below the 680 minimum that I needed for the mortgage and interest rate I wanted (prime minus 0.80 percentage points). The lender essentially had to make an exception to get us approved. [Globe and Mail]
This is also a useful practice when you’re looking to get your score to a specific point in order to get a mortgage, or other financial venture. There’s many ways you can go about doing this as well:
- To simply get your report for free, you can do so either in person or via mail
- Equifax Canada has a great service for $19.95 a month that will allow you unlimited access online, and updates via email. Or for a one-time fee of $9.95 you can have a peek at it as well.
Some more helpful tips about your credit report:
- During the application process, lenders look at your credit record and credit score to check how you’ve managed your debts.
- It’s a smart idea to review your own credit report and score before applying for a loan.
- For a small fee, a credit bureau will provide an instantaneous, complete online credit report and credit score that details your current debts and payment history. They also detail what your score level means, how you compare to others, and provide tips to improve your score.
- You also may receive your credit report (without the credit score) by mail for free by contacting the credit bureau.
- When you receive your credit report, ensure that all the information and amounts are correct. Look carefully for any past-due or written-off amounts. Uncertainty and ambiguity on your credit report can be dangerous to your financial health.
If you have any questions about how to obtain a credit report or tips for staying on top of your credit, please feel free to contact me anytime. Further, you can also reach me via Twitter.
