How Credit Scores Affect The Rate You Get
There is an immense complexity that has enveloped mortgage rates in Canada over the past few years. One of such convolutions is the massive dependence of the Canadian market on credit scores for the procurement of a good rate of mortgage. Literally, the higher the credit score, the lesser will be the rate of interest. In fact, the disparity between a bad and a good credit score can raise the total loan cost by about 3%.
How Do Lenders Take Out Credit Scores?
The total credit score, pertaining to setting up mortgage Canada rates, is taken out by amalgamating the following factors:
· payment history
· duration of the credit history
· the available credit and the sum owed
· kinds of credit used
Here is a sneak peek at how the aforementioned factors can affect your ability to bargain for good mortgage Canada rates:
Non-Payment Of Loans
It’s only obvious that paying off loans on time reflects positively on your credit score, consecutively helping you get an excellent mortgage rate. If you have installment loans, paying up the installment before the due date is good, as it illustrates that you are ready and capable to repay debt.
Also, if you have a non-mortgage debt, make sure you pay it back as quickly as possible so as to improve your credit score and get better mortgage Canada rates.
The age of the loan you take directly affects your credit score. According to the experts, loan takers, with shorter credit histories, have a bad repayment risk than consumers with longer credit histories. Moreover, people who open new accounts on a regular basis have bigger repayment risk than consumers who do not involve themselves in such practices. Hence, if you want to strike lucrative mortgage Canada rates, it’s important you pay debts on time. This will improve your credit score immensely.
The Available Credit And The Sum Owed
People with bigger credit amounts are automatically put into the future repayment risk category than consumers who owe lesser money. It results in the score calculating the total non-mortgage debt a person has still left to pay back.
Normally, the sum total of a consumer’s outstanding amount on his/her last statement is the amount that gets reflected in the credit report. Moreover, even if the installment is paid in full every month, the credit report will only reflect the balance of the last billing statement.
To summarize, paying back debts and keeping low balances will assist to enhance ones credit score, which in turn will provide better mortgage Canada rates. Consolidating, however, does not increase the score, since the same amount remains outstanding.
Tips to enhance your credit score for a better Mortgage Canada
· Getting in touch with the creditors to get the errors on the credit profile rectified
· Evaluating ones credit report annually
· Keeping the balances less than 50% on the credit cards
· Taking a credit only when it is really needed
· Paying off other forms of debts as soon as possible.