Having bad credit is one of the main reasons that you could be turned down for a mortgage, as it represents the credit risk that financial institutions are taking if they loan you money. Repairing this score is a bit like losing weight, there is no quick fix, it just takes time and acting responsibly. Here are some things that you can do right now to put you on the right track.
- Review your credit report – There are many places online that you can request your credit score for free. Once you have examined the report, it contains information that is used to calculate your credit score and it can sometimes contain errors. There are two common errors you can find: any incorrect listings of late payments and improper amounts owed in each of your open accounts. If you find any of these things report it to the Credit Bureau of Canada.
- Institute automatic withdrawals or set up reminders for payment – Ensuring that your bills are paid on time is the largest contributing factor to having a good credit score. You can set up automatic withdrawals from your bank accounts or credit cards to ensure that they are paid off or set reminders in your calendar every month. Both of these will help you be more fiscally responsible.
- Reduce your debt – This step is the most difficult, but also the most satisfying. Pay off any high-interest debt first, for most people this will be credit cards. Then work your way down. But don’t forget the minimum payments on all other debts. Just because you’re focusing on one debt doesn’t mean the others can be put on hold.
If you have any questions about these steps, speak with a mortgage specialist to assist you.