My passion is to keep the seemingly complex simple. I have created my website primarily as a resource tool for my current and potential clients to increase their mortgage intelligence. Credit is frequently used, sometimes abused, but more importantly it is misunderstood. Click to learn more on your credit report, increasing your credit score, credit myths, and our credit improving software Scoremaker.
Quick Background
Your credit score is a detailed history of how you have managed your past debts. Your beacon score or credit score or fico number (same report, different terminology) are all numerical summaries of your willingness to re-pay your debts at that moment in time. Think of your credit score like a little number floating over your head everywhere you go. It is constantly changing and is very important. Lets make that little number grow!
1. The maximum beacon score anyone could ever have is a perfect 900. Your repayment history is the most important, and biggest influence on your credit report. 35% of your total credit score is determined by your re-payment history. Therefore your repayment history accounts for 315 points out of a possible 900. Always make your payments on time, even if you only make the minimum payment. Sometimes you may miss a payment, which will show on your credit report. When you are in the process of purchasing a home make sure to disclose any past delinquencies to your mortgage broker. CMHC reports there are mistakes in 30% of all credit bureaus pulled in Canada. If there is a collection, or missed payment in your bureau that you did not mention, we need to handle it immediately. Bottom line; make your payment on time and in full if possible.
2. The outstanding balance relative to your credit limit accounts for 30% of your credit score. This is a possible 270 points out of 900. If the outstanding balance of your credit card is $4,750 and the limit is $5,000 you are using 95% of your available credit. You have used your credit (good job), but now you need to show you can manage that debt and repay it. The lower your credit balances are, relative to your credit limit, the higher your beacon score (more of the possible 270 points added to your score). To immediately increase your credit score, lower your balances to 75%, or 50% (or pay it off!) of your credit limit. *IMPORTANT* If you have several credit cards or lines of credit with zero balances, this will not effect your monthly obligations. Pre qualifying through a mortgage broker requires a minimum repayment of 3% a month of your outstanding balance on revolving credit (not the limit).
Thank you for spending 5 minutes with me. Learning about credit is never ending, but these are the two major influences you can take control of today. There is more to learn at Equifax and Trans Union. Now take control of that invisible floating number over your head and make it grow.
Chad Moore
C:403-809-5447
chad@yycmortgage.com
yycmortgage.com
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