Oscar Wilde said that every saint has a past and every sinner has a future.
What he meant was that everyone has a history and some of us have good pasts, and some have not-so-good ones. The same holds true when it comes to our credit history. Overall, there are things we can do to correct our past wrongs, but it’s a lot easier to be a saint along the way – especially if you hope to be a homeowner one day.
In today’s world, how you spend your money can be well traced through credit card reports and repayment histories. Credit reports document your financial history and contain information about your debt including loans and credit-cards and lines-of-credit. The report also shows how regularly you make payments on that debt and how many times you have applied for credit.
Credit reports can impact your ability to acquire a mortgage since financial institutions use them to help determine your spending habits and to establish if there is a risk of you defaulting on your mortgage payments. If you have a high credit rating, then you are more likely to consistently pay your bills on time.
As a home buyer, your goal should be to make sure your credit score is high. The best way to do that is have a history of paying credit card bills in full and on time, as well as any other bills. If for some reason you can’t pay the bill in full, be sure to make the required minimum payment. Don’t take on more credit than you are able to handle and don’t go over your credit limit. Also, be diligent about checking your monthly bill statements to ensure they are correct. While it’s a good idea to apply for a credit card so you have a traceable spending past, don’t overdue it by collecting too many credit cards – people who have applied for a lot of credit tend to score lower on their reports. For people who have claimed bankruptcy, that information stays on your report for six to seven years.
For more information read “Understanding Your Credit Report and Credit Score,” a free publication issued by the Government of Canada. The pamphlet provides sample credit reports, credit score documents and information on building and improving credit in Canada. The publication is available at the Financial Consumer Agency of Canada website at www.fcac-acfc.gc.ca
To find out what your current credit rating is, consult a reporting agency such as Equifax Canada or TransUnion Canada. For a small fee you can request your score online or you can ask for it via mail, which is free.
The information contained in the report is confidential and you have to give permission for third parties such as banks, employers and landlords, permission to view it.
To request your credit report,
visit www.equifax.ca or
This article was provided by Genworth Financial. Visit www.genworth.com for more information.