Tips To Improve Your Credit Score
Diane Gogar • July 22, 2020
Your credit score is critical to you obtaining credit. Applying for a car loan, a consolidation loan, a line of credit, a mortgage, or even a cell phone can be a challenge if your credit score is low. Your application may de declined or you may get a higher rate on credit if your score is low. The lower the score, the higher the risk and the higher the interest rate. Lenders are not comfortable lending to a client with late payments or collections on their credit bureau.
Your credit score is also very important to a landlord. You may be turned away from renting an apartment if there are late payments on your credit bureau. This is a high risk application because it tells the landlord that the rent payments will be late, if credit card payments or loan payments are late.
Why is having good credit important?
A bureau that shows payments on time tells a lender that this client is responsible towards credit and will be responsible in the credit applied for. Lender feels inclined to lend here.
A bureau that shows a lot of credit cards with high balances tell a lender that this client may be using credit cards to supplement their income, or is a big spender. This scenario will result in a lower credit score and can result in less money being lent by the borrower and also a higher interest rate.
A bureau with constant late payments and collection items say that this client is irresponsible towards his obligations. Lender may require security for a loan in this instance because the likelihood of their loan not being paid is high. The lender may decline application even if there is security, because they do not want to take on the risk of non-payment.
So what should you do to keep your credit score high, or to improve your credit score?
- Make all payments on time, even if it is just the minimum. A one day missed payment is registered as a 30 day late payment on your bureau. You can make this easy by paying online, or setting up a pre-authorised minimum payment by the credit card company.
- Keep credit cards balances below half of the limit. If a card limit is $5000.00, your goal should be to keep the balance around $2000.00. The ideal would be to stop using credit card until you have brought the balance down to below half.
- Pay telephone bills on time. Yes, phone bills are registered on your credit bureau. If there is a dispute with a phone company, pay the bill before it goes into collection and then continue the dispute. The phone company sends uncollected bills to a collection company. It is registered on your bureau as a collection item and causes a huge drop in your credit score.
- Do not close off credit cards until you confirm the balance is zero. Sometimes there is an interest payment, depending on the date you close off card and you may think the card is paid off, but there is a small balance, which if goes unpaid will register as a late payment.
- Do not close card until card is paid. Sometimes, a client may have a balance on a card and doesn’t want to use it anymore. So they cut it up and continue making payments . They ask the credit card company to close the account. The credit card company puts a message, ‘closed by credit grantor.’ This results in a R9 on the credit card and affects a credit score badly. It is a reason for an application to be declined. It says to a lender that client could not pay the card and the credit card company closed it .The other side of asking a credit card company to close off a card when it is fully paid, is a message on the bureau, is ‘closed by consumer.’ This is a good message, It says you no longer wanted the card and you paid it off. It says you can handle credit responsibly.
It is important to check your credit at least annually to ensure everything is well with your credit and there are no mistakes. These can be other credit cards or loans or collection items that do not belong to you. - Your credit card limits should be at least $2500 or more. If you have one card with a limit of $1000.00 it does not give a lender a correct picture of how you can handle credit, if you are applying for a mortgage of $500000.00
Aim for 2 cards with at least $2500.00 limit.
Credit cards and loans are necessary to building a healthy credit bureau. These must be used responsibly so that you can have a better score, and hence get the necessary and intelligent credit you require for your present and future financial goals.
If you have any questions about how to improve your credit score, please contact me directly.
Chances are if the title of this article piqued your interest enough to get you here, your family is probably growing. Congratulations! If you’ve thought now is the time to find a new property to accommodate your growing family, but you’re unsure how your parental leave will impact your ability to get a mortgage, you’ve come to the right place! Here’s how it works. When you work with an independent mortgage professional, it won’t be a problem to qualify your income on a mortgage application while on parental leave, as long as you have documentation proving that you have guaranteed employment when you return to work. A word of caution, if you walk into your local bank to look for a mortgage and you disclose that you’re currently collecting parental leave, there’s a chance they’ll only allow you to use that income to qualify. This reduction in income isn’t ideal because at 55% of your previous income up to $595/week, you won’t be eligible to borrow as much, limiting your options. The advantage of working with an independent mortgage professional is choice. You have a choice between lenders and mortgage products, including lenders who use 100% of your return-to-work income. To qualify, you’ll need an employment letter from your current employer that states the following: Your employer’s name preferably on the company letterhead Your position Your initial start date to ensure you’ve passed any probationary period Your scheduled return to work date Your guaranteed salary For a lender to feel confident about your ability to cover your mortgage payments, they want to see that you have a position waiting for you once your parental leave is over. You might also be required to provide a history of your income for the past couple of years, but that is typical of mortgage financing. Whether you intend to return to work after your parental leave is over or not, once the mortgage is in place, what you decide to do is entirely up to you. Mortgage qualification requires only that you have a position waiting for you. If you have any questions about this or anything else mortgage-related, please connect anytime. It would be a pleasure to work with you.
The idea of owning a vacation home—your own cozy escape from everyday life—is a dream many Canadians share. Whether it’s a lakeside cabin, a ski chalet, or a beachside bungalow, a second property can add lifestyle value, rental income, and long-term wealth. But before you jump into vacation home ownership, it’s important to think through the details—both financial and practical. Start With Your 5- and 10-Year Plan Before you get swept away by the perfect view or your dream destination, take a step back and ask yourself: Will you use it enough to justify the cost? Are there other financial goals that take priority right now? What’s the opportunity cost of tying up your money in a second home? Owning a vacation home can be incredibly rewarding, but it should fit comfortably within your long-term financial goals—not compete with them. Financing a Vacation Property: What to Consider If you don’t plan to pay cash, then financing your vacation home will be your next major step. Mortgage rules for second properties are more complex than those for your primary residence, so here’s what to think about: 1. Do You Have Enough for a Down Payment? Depending on the type of property and how you plan to use it, down payment requirements typically range from 5% to 20%+ . Factors like whether the property is winterized, the purchase price, and its location all come into play. 2. Can You Afford the Additional Debt? Lenders will calculate your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios to assess whether you can take on a second mortgage. GDS: Should not exceed 39% of your income TDS: Should not exceed 44% If you’re not sure how to calculate these, that’s where I can help! 3. Is the Property Mortgage-Eligible? Remote or non-winterized properties, or those located outside of Canada, may not qualify for traditional mortgage financing. In these cases, we may need to look at creative lending solutions . 4. Owner-Occupied or Investment Property? Whether you’ll live in the home occasionally, rent it out, or use it strictly as an investment affects what type of financing you’ll need and what your tax implications might be. Location, Location… Logistics Choosing the right vacation property is more than just finding a beautiful setting. Consider: Current and future development in the area Available municipal services (sewer, water, road maintenance) Transportation access – how easy is it to get to your vacation home in all seasons? Resale value and long-term potential Seasonal access or weather challenges What Happens When You’re Not There? Unless you plan to live there full-time, you'll need to consider: Will you rent it out for extra income? Will you hire a property manager or rely on family/friends? What’s required to maintain valid home insurance while it’s vacant? Planning ahead will protect your investment and give you peace of mind while you’re away. Not Sure Where to Start? I’ve Got You Covered. Buying a vacation home is exciting—but it can also be complicated. As a mortgage broker, I can help you: Understand your financial readiness Calculate your GDS/TDS ratios Review down payment and lending requirements Explore creative solutions like second mortgages , reverse mortgages , or alternative lenders Whether you’re just starting to dream or ready to take action, let’s build a plan that gets you one step closer to your ideal getaway. Reach out today—it would be a pleasure to work with you.
