To get approved for a loan and to pay a lower interest rate it’s important that your credit report reflects that you’re a responsible borrower who pays their debts on time with a low risk of defaulting.
Credit Report vs. Credit Score
To start with, it’s important to understand that your credit report and your credit score are two separate things.
Established credit in this case would be any credit report that has at least 2 accounts reporting with a limit of $2,000 for 2 Years.
An important rule of thumb to remember regarding credit is that YOU are your only advocate for your credit. YOU are the only one that can improve your credit. YOU are the only one that can manage any errors on your credit.
YOU are the only one who can determine who pulls and when your credit is looked at. Frequently, when we move forward with a client’s application for mortgage preapproval, there are errors on the individual’s credit report (some statistics say 80%). It is a MUST that those errors are corrected immediately.
Your ‘beacon score’ is an indicator for a lender as to whether a client is likely to make payments on time and in full.
The credit score is also referred to as a FICO Score and is a mathematical formulae created by Fair Isaac and Company. The credit score is used by most companies to see if you are a good credit risk or not. Equifax and Trans Union will crunch the numbers from the credit report, and spit out a number somewhere between 300 and 900, or even no number or R for Reject.
A score over 680+ is considered excellent.
Each time a creditor (potential lender) checks your credit report, a record is created of this event. There are two types of inquiries, soft and hard. A soft inquiry occurs when you pull your own credit report. (Worth doing on an annual basis and FREE via mail at either Equifax or TransUnion.)....
At this time of year, especially if you were extra generous with your gift giving, it’s important to review the top factors that can lower our credit scores.
I would recommend ordering a copy of your credit report annually, review it carefully and correct any significant errors:
www.equifax.ca or www.transunion.ca , Then, go over to see if any the following applies:
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