Credit History

When lenders lend the money, they mainly look into two main strengths in a client's credit application:

  • Ability to pay back
  • Willingness to pay back

The ability to pay back the loan is determined by applicant's income, assets and job tenure etc.

And the willingness to pay back is determined by their "credit history".

The way you deal with credit develops your credit history. Late payments, collection items, and high balances are major factors that can hurt your credit score. In Canada, there are two main credit bureau agencies: TransUnion and Equifax.

How can you improve your credit history?

Mortgages are mostly the biggest debt you will ever get, that is why lenders want to see perfect credit history. If your credit history is not strong, you can rebuild your credit by doing the following:

Minimum payments on credit cards, monthly payments on loans and lines of credits, phone bills or taxes, pay ALL of your dues on time.

Don't keep high balances on revolving credit products such as credit cards or lines of credits. If your credit card limit is a $1000, do not be at a $1000 all the time, pay it back and stay well under your credit limit. Some credit cards will allow you to go over limit, keep in mind that going over the limit, and staying there for a long period will affect your credit negatively.

If you have any collection items, pay it off regardless of what that is as soon as possible.

Do not apply for credit too many times. The lenders will see you as a "credit seeker" if you apply frequently. Because each time you apply for credit, lender pulls up your credit bureau and reports that on bureau.

Speak to a mortgage specialist through to learn more about how you can improve your credit history. Remember, if your credit is good, you can get better Canadian mortgage rates.