Could a line of credit impact my mortgage application? + MORE Oct 7th

You’ve never missed the rent or been hounded by collection agents, so surely you’ve got stellar credit, right? Not necessarily.

There’s more to a good credit rating than simply paying the bills on time, explains debt counsellor Brian Betz of Money Mentors, a non-profit credit agency in Calgary. While payment history counts for 35% of your score, which is calculated within a range of 300 to 900, the other determining factors break down as follows (and you’ll find more detail below):

30% credit utilization
15% length of credit history
10% the number of credit inquiries on your report
10% the types and variety of credit you have

A score of 800 or more is excellent, 720 to 799 very good, 650 to 719 good, and 600 to 649 fair. If your credit rating is between 300 and 599, lenders will consider you a poor bet.

Being on top of the lesser known elements of credit can help you avoid nasty surprises, like being declined for a car loan or mortgage, or not qualifying for the best rates because of so-so credit…

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Faced with high inflation and rising interest rates, more Canadians are finding it difficult to qualify for a mortgage. The problem can seem even worse if you struggle with poor credit. The good news is that even if your credit history is less than stellar, you may not have to put off buying a home, although you will likely pay more for your mortgage.
This article will explain how to qualify for a bad credit mortgage and what steps you can take to improve your credit score.
Do You Know Your Credit Score?
One of the biggest mistakes people make before getting a mortgage is not knowing their credit score before applying. Recent reports have revealed that more than 50% of Canadians have never checked their credit scores. If you’re only finding out that you have bad credit when you apply for a mortgage, it may be too late to do something about it.
What Is a Good Credit Score?
While lenders can set their own minimum credit score guidelines, the following generally applies:
800 or above: Excellent
720 to 799: Very Good
650 to 719: Good
600 to 649: Fair or average
Under 600: Poor
To obtain a mortgage with a Prime lender (banks and credit unions), you will likely require a credit score of 600 or higher…

Prospective house hunters and those looking to refinance an existing mortgage should consider the impact of their lines of credit on their mortgage application. That’s because lenders take non-mortgage debt, including line of credit payments, into account when determining how much you can afford to borrow. 

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How a line of credit affects a mortgage application

Lenders consider factors like a borrower’s creditworthiness, income and existing debt before lending them money.

When it comes to mortgages, they want to know what percentage of your income will be spent on housing costs, to ensure you can afford your future mortgage payments. This is called the gross debt service ratio (GDS), and it is based on your mortgage principal and interest, taxes, heating costs and condo fees (if applicable) divided by your income…

Here’s your Rewards Canada update! Your near daily dose of loyalty program, credit card and travel news, bonuses, deals and more. New Amex Offers Two more Amex Offers to let you now about. There is now a Stuart Weitzman statement credit offer available as well as an offer for PRESTO: Spend at least $500 in […]
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