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Credit score has a huge impact on your financial health

Checking credit score

When it comes to mortgages, your credit score can be the difference between getting a good mortgage rate and qualifying for a mortgage at all.

As a mortgage and finance professional, it’s my job to guide you through some simple, yet important steps to help you get your credit score right where it needs it to be so you can realize your mortgage goals and dreams.


 

Five key factors

Credit scores can range for a low of 300 to a high of 850. The higher the numbers, the more loan-worthy you become to lenders.

Up to 1 in 8 people applying for a mortgage may not qualify because their credit score is between 500 and 600. Here’s a simple chart that let’s you know how mortgage underwriters assess applicants:

720 and over

Terrific - Best Rates and Terms offered to you

700-719

Excellent - High Value Borrower

680-699

Good - In good position to purchase

660-679

OK - Wouldn't receive exceptions to policies

640-659

Borderline - Ok if strong in other factors

620-639

Weak - File would need to be perfect

600-619

Difficult - will need work or a special program

Below 600

Trouble! - you will need to fix your credit

 

Scores are determined using 5 factors...

  • Payment History accounts for 35% of your score. Late payments have a negative effect and missing a big payment hurts your score more than missing a small payment.
  • Outstanding credit balances also account for 35% of your score.  Keeping your credit card balance below 70% of your available limit will make a positive difference in your credit score.
  • Your credit history accounts for 15% of your score.  An experienced borrower often scores better than a brand new borrower.
  • The type of credit you owe accounts for 10% of your score.  A mix of credit cards, auto loans and mortgages is better for your score than a high concentration of credit card debt.
  • The number of inquiries made about your credit history accounts for 10% of your score. Each formal inquiry can cost 2-50 points on your score, so if you apply for a lot of credit, it can negatively impact your score. 

Here’s a tip

I’m an expert at helping my clients employ debt strategies that can help improve their credit score. Here’s just one example:

When a credit report is run, it’s simply that day’s snapshot of your credit profile.  If you get approved for a mortgage, you need to be sure to stay very responsible with your spending. If you were to decide to go on a major shopping spree after you qualified for your mortgage and as a result, increased your credit burden, you could change your debt ratios and find you’re no longer qualified for that mortgage. 

If you’d like more information or help on maximizing your credit score, just drop me a line or email me.

Looking for a mortgage? Wondering if you qualify? Interested in refinancing? Our secure and completely confidential “no obligation” quick-form can give you answers, fast. Find it here.

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Contact Us

  • Ottawa-Carleton Mortgage Inc
    381 Richmond Road Ottawa,
    Ontario K2A 0E7
  • Phone: 613-563-3447
    (24 hours)
  • Fax: 613-563-3195

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