One of the important factors in home ownership is understanding things like your credit score. Some people don’t pay much attention to this metric until they begin the mortgage discussion! However, you will find that your credit score is one of the most important factors when it comes to qualifying for a mortgage at the best rate – and with the most purchasing power.
Credit scores range from 300 to 900, the higher your credit score the better. Ideally, you should be aiming for a credit score of 680 for at least one borrower (or guarantor), especially if you are putting under 20% down. If you are able to make a larger down payment of 20% or more, then a score of 680 is not required.
This score is based on spending habits and behaviours including:
- Previous payment history and track record of paying your credit accounts on time is the number one thing that your credit score considers.
- Your current level of debt and whether you’re maxed or not is the second most important factor.
- How long you have had your credit in good standing is the third most important factor.
- Attaining new credits is the fourth factor and can be a red flag if you’re opening several credit cards, accounts, or loans in a short period.
- Your credit mix is the final aspect of your credit score to determine whether you have a healthy mix of credit cards, loans, lines of credit, etc.
If you want to improve your credit score, you can! It is a gradual process, but it is well worth it.
Here are some tips to help you get started!
Pay Your Bills:
Pay Your Debts:
Stay Within Your Limit:
Credit and Loan Application Management:
If you have questions about your credit score, don’t hesitate to reach out to me today! Whether you want to check your score or find out how you can improve it, my door is always open.
