Repairing Your Credit Now For The Future

Applying for a mortgage to buy your dream home can be nerve-wracking if you’re unsure of where your credit stands. If you are planning to look into homeownership in the future, now is a good time to start repairing credit if you need to.
Credit report vs. credit score
A credit report will show all of your borrowing, payment and delinquency history from anywhere in the last seven and ten years, whereas a credit score is a numerical value between 350 and 850 based on a statistical formula that determines your credit worthiness.
A credit score can be affected by people looking at your credit history when you apply for more credit (called a “hard inquiry”), carrying a high balance on cards or missing payments, however, it is possible to gain limited credit with a poor credit score as long as the lender can see that you make your payments every month and on time when they check your credit report.
How to check your credit report and credit score.
There are a slew of companies offering “free” credit reports, but the majority of them (including the ones advertised on television) will usually add a monthly charge to your credit card and intimidate you with a lot of fine print.
You are legally entitled to a free credit report annually from each of the major credit bureaus: TransUnion, Experian and Equifax. To obtain your free credit report you usually must send in copies of identification to these companies and wait for it to arrive in the mail.
If you are impatient and have a bit of extra cash, you can often get your credit report within a few minutes online for a small fee from these companies. TransUnion, for example, charges $14.95 for your credit report and $6.95 for your credit score. Getting them online is typically as secure as via snail mail as you must answer several identifying questions about your credit history. Once you’ve got your score and credit report you will have a good general idea of how you are currently viewed by potential lenders.
How to boost your credit score
First thing’s first – read your credit report carefully. Look for any accounts you don’t recognize, inaccuracies or blatant errors and report these immediately to that credit company or the credit bureau. Secondly, do whatever you can to make your payments on time because late payments along with accounts in collections or bankruptcies are what bring down credit scores the most. Create a budget, mark your calendar or bookmark your credit account websites so you can check them frequently and know your due dates. Another factor that can be detrimental to your score is having credit card balances that are over half of the limit. An effective way to pay these cards down is the “snowball” method, paying the card with the highest balance and interest rates first. While you’re working on repaying your debt and boosting your score, wait as long as possible before applying for more credit. These “hard inquiries” by credit companies bring down your score and show that you are possibly overextending yourself by taking on more debt.
Have patience. These little changes in how you pay, monitor and use your credit will go a long way. Checking your credit report at least twice a year will ensure you’re able to catch identity theft early and are up to date on where you stand as a potential mortgage applicant.

This site is owned & operated by: Royal LePage Real Estate Services Ltd Johnston & Daniel Division,477 Mount Pleasant Road, Toronto, Ontario, M4S 2L9, 416.489.2121. The content is provided by a number of sources as referenced in the contribution list..

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