It was the best of times, it was the worst of times! The perfect home of your dreams had been found and it was right in your back yard all along! Your friendly neighborhood realtor had recommended a few Calgary mortgage brokers and there you were, sitting in their office going over your finances. This was actually your second visit, because the broker wanted to go over the results of your credit check.
Yes, in order to make purchases of this magnitude, lenders want to know that you are good on your debt and that you handle it well. This is because they want to see their money back at some point, and if you don’t have a healthy credit rating, they will be less likely to extend you the loan.
One thing to note about these credit checks, and this author has to deal with one of them herself, is that sometimes creditors won’t report that an outstanding amount has indeed been looked after. This author has to contact Canada’s two primary credit agencies: TransUnion: www.transunion.ca and Equifax: www.equifax.com and get one item from back in 2009 cleared up. It was paid 5 years ago, but the creditor in question had never updated my credit history. The amount is still “on the books”.
Building a positive credit history is a double-edged sword. It is most easily built by having a low-rate credit card that you pay off at the end of every month. This advice is as old as the credit card hills themselves, but it still holds true today. When you go to buy a car, credit agencies will see that you’ve been faithful in paying off credit card debt and banks will let you buy the car. When you pay off the car loan, you build your positive credit history even more. Now you’ve shown that you can handle a larger monthly payment and remain true to your financial obligations. But if you spend more on your credit card than you can pay off every month, or if that steady job walks away on you, suddenly it gets harder to maintain that positive credit rating.
Banks begin to frown on high gross debt service and high total debt service ratios. When considering buying a house, your Calgary mortgage broker can offer ideas for working down those ratios to a level where their lenders, who are usually more lenient than the banks, will finance your mortgage. Give www.MortgagesForLess.ca a call to see how they can help get you into a home.