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Good credit GETTING A MORTGAGE WITH A GOOD INTEREST RATE By Ryan Oake
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our credit score will be one of the biggest single factors in determining your approval for a mortgage and the interest rate you qualify for. Here are five factors that will impact what kind of credit score you have, from 300 at the weakest, to 900 at the strongest.
1. Credit mix. The different types of credit you have attached to your name, such as credit cards, lines of credit, car loans, student loans and so on are a small factor in your credit score (about 10 per cent). Lenders like to see two different types of credit on your credit bureau.
2. New credit. Inquiries made for adding new credit to your name and the opening of new credit cards or loans also have an impact (about 10 per cent). Many people are under the impression that every time your credit score is requested, it will take a hit. When it comes to applying for a mortgage, there is no real impact on your credit score when an independent mortgage broker requests a copy.
3. History. Your credit history is a bit more important (about 15 per cent). It relates to the length of time you have had different types of credit loans open. Lenders like to see a minimum two-year history for each type of credit. 4. Utilization. Lenders look more intensely (about 30 per cent) at how much of your available credit you owe and how much you have access to. They add the total available credit limits across all credit cards and lines of credit, and subtract all outstanding balances. Having 75 per cent or more of all available credit outstanding will negatively impact your score.
5. Payment history. Your payment history relates to whether you make your payments on time and in what amount. Every month you need to pay the minimum, however, the more you can pay, the better. A single missed payment can have significant impacts on your credit score, more so than any other factor listed above. Missing two consecutive months of payments or two payments within the same year can put you on the fence between being approved or declined regardless of available down payment, income or overall score. n Ryan Oake is an accredited mortgage professional with Oake Mortgage. Learn more at oakemortgage.ca.
FIND A MORTGAGE THAT FITS YOU, AND ONLY YOU! No two mortgages are the same, get in touch with us today and see how we match you with your best option. We also offer mortgage renewals, mortgage refinancing for debt reduction, equity take out and investment mortgages.
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EXPERIENCE TRI-CITIES | SPRING 2020
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