One key component in your mortgage application is your credit rating.  Credit Scores are a 3 digit number ranging from 300-900, 300 being poor and 900  perfect – and almost impossible to attain.  Creditors will report your loans, lines of credit, credit cards, car loans, student loans and mortgage loan details to the credit bureaus (Equifax anortgaged Trans Union ). Your score is used by the lenders to help determine credit risk and how likely you are to pay back your mortgage as agreed.

When it comes to applying for a mortgage a higher credit score can result in better rates and terms, more options and higher approval amounts! So let’s talk about the major factors that will affect your credit score:

1. History

Your credit bureau includes the history of any loans or liabilities in your name or that you may have co-signed for. It tells us how long you have had each liability, and ideally we like to see  a minimum of 2 years reporting on the credit bureau of two trade lines / loans so show sufficient history.

Your payment history is also reported to the credit bureau. If you’ve missed payment on a loan this will appear, along with how many payments you may have missed and how late the payment was. Late payments will have a negative impact on your credit score.

When a financial institution does a credit check at the time of a credit application this is called an inquiry. Any past credit inquiries report to the credit bureau and the bureau will show us who pulled your credit and when.  Too many inquiries in a short period of time can also start to bring your credit score down as it can appear as though you are credit seeking and possibly in financial trouble.

2. Usage

Another factor in determining your credit score is your credit usage. You do need to use credit to build a great credit rating, but must use it responsibly. When it comes to credit card and other revolving debts you will want to ensure that you have credit available and are not overextended. Paying credit cards off monthly and / or keeping those balances well below the limits will increase your score and show the lenders you can manage credit wisely.  On the flip side,  if you max out or go over your limit on your credit cards or credit lines you can expect your credit score to suffer as a result.

3. Public Records

Public records include things like collections, bankruptcies, judgements and liens.   These can all have a longer term impact on your credit rating and it can take time to rebuild that positive credit history.  For example, a $50 collection from your internet provider for forgetting to return your cable box is a common one I see, and once paid back should have minimal affect on your rating. However, a Bankruptcy in the tens of thousands of dollars will of course have a much longer lasting effect on your credit worthiness and ability to secure a mortgage. It can take years to reestablish your credit in this case.

If you will be shopping for a mortgage in the near future I recommend a credit review. Give me a call and we can review your report together and address any potential issues now to ensure you can get the best mortgage possible when you purchase, refinance or renew your mortgage.

1.        Paperwork Prowess

Real Estate transactions are document heavy. They involve contracts, disclosures, waivers and more initials and signatures than you care to imagine. Let a Realtor tackle the paperwork for you. They are familiar with the documentation and terms used which can be an enormous help and can also save you from costly mistakes as a buyer or seller. Realtors have extensive knowledge on how to write up offers with conditions and terms to protect and benefit their clients based on their needs. They are also better equipped to help advise client on if and when any conditions can be lifted.

2.        Pricing Expertise

Realtors have access to the data, education, tools and experience needed to best advise on home values for both sellers and buyers. They look at market trends, comparable pricing, housing market conditions and how different neighborhoods hold value when advising their clients. This unbiased information is crucial when making an informed decision on either selling or purchasing a home and for achieving successful results.

3.        Industry Network

It takes a team of qualified professionals to ensure a real estate transaction goes smoothly. Realtors have an arsenal of reputable contacts in their back pockets to help with all aspects of a purchase or sale. Lawyers, Mortgage Professionals, Home Inspectors, Contractors, Home Stagers, Landscapers, Cleaners and Movers. I guarantee your realtor has someone they recommend with a history and track record of excellent service. Why gamble on a google search?

4.        Professional Expertise and Ethics

Realtors must adhere to the Canadian Real Estate Association’s (CREA) rules, regulations and strict code of ethics. They are educated professionals and it is their duty to offer honest and ethical advice. There are serious repercussions should a realtor act in a way that is deemed unethical.

Realtors are constantly upgrading their skills and education. Many will have niche markets in which they are considered experts, specializing in things like acreages, condos or luxury homes. Most of us only purchase a few properties in a lifetime and this may be your largest investment. Working with a seasoned professional who facilitates hundreds of transactions and has industry education and experience only makes sense.

Cory Lewis

Mortgage Broker, Jencor Mortgage