10 “Must Know” Credit Score Facts
Like other loans, a mortgage is not an exception where a good credit score plays a key role in a lender’s decision to offer credit. Just take a couple of minutes to get the facts:
1. When you apply for the mortgage loan, lenders may check your credit score with Equifax and/ or TransUnion, two credit-reporting agencies in Canada.
2. The lowest, average, and maximum credit scores in Canada are 300, 650, and 900, respectively.
3. A good credit score will increase your chance of approval when you apply for a mortgage, and the line of credit. Instead, a low credit score poses a higher risk of defaulting on borrowers' payments for lenders.
4. Payment history, length of credit history, how much of your limit you have used, different types of credit you hold, and the frequency you apply for credit are five key elements that affect your credit score.
5. Checking the details of your credit report can help detect any inaccurate information or any mistakes and omissions as agencies have a process to report errors and get them corrected.
6. If you have a credit score of 700+, you will have a higher chance of loan approval, greater borrowing limits, and lower interest rates and insurance premiums.
7. Keep in mind that credit scores are continuously evaluated and adjusted. You can improve and/ or rebuild your credit score by using credit responsibly.
8. Checking your credit score on a regular basis (a soft enquiry) is a good exercise and will help you detect errors, monitor improvements, and identify fraud.
9. Making payments on time, paying the full amount owing, using the 35 percent or less of your available credit, holding a variety of credit types, applying for new credit sparingly can also help you raise your credit score.
10. Last but not least, do not underestimate things that affect your credit score. A good credit score is one of the key factors required by top mortgage lenders such as chartered banks, and other 'A' lenders in the sense that it will attract a high chance of approval with lower-interest rates. Always Keep an eye on your credit score.