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New to Credit

        With never having credit, most times you will need to start small.  If  you have a relationship with a bank, apply for their brand of Visa or  Mastercard and try for a limit of one thousand dollars or more but  remember  the credit limit will depend on your income.  Any amount is  good but the higher the amount of credit you can handle, the better it  looks.  If you bank declines you the next move is a non-bank credit card company.  If they offer a "secured" credit cards and you do not fit into their traditional guidelines they will most likely offer you a "secured" card.  This type of credit card is one where you supply a deposit until the credit card company feels you are able to manage the credit.  when that happens they will give you your deposit back and most likely increase your limit.  Credit cards and lines of credit are called revolving credit and this is one aspect of your credit report, the other is installment loans.

After you have had your credit card for a few months, apply for  a small loan like an RRSP from a bank or a computer or TV from a dealer for a couple thousand dollars.  This loan will need to be paid back in a fixed payment agreement and is call an installment loan.  With both the revolving loan (credit card) and the installment loan (RRSP or computer) you now have a well rounded credit rating that looks good.   The final part is the length of  time you have had the credit for.

Because one of the factors lenders look at is the time you have had credit you will need about a year with these credit lines for a lender look favorably on your mortgage application.  the longer the better and the more credit the better .  Remember, keep your balance at or less than 35% of your credit limit and you will build that credit rating to where you will 

Rebuilding Damaged Credit

Damaged credit will cost you higher interest rates or being declined for loans.  If you know you have past credit problems, one of the most important things is not ignore what has happened, or is happening. 

First thing to do is get a copy of your credit rating either by mail, phone or online; knowing what has been reported is crucial.  For accounts that have gone to collection you must settle those debts as they are reported as an unpaid collection and to get a mortgage, they must be paid off.  Accounts that are reporting as being over 30 days past due must be brought up to date and any balances that are over your credit limit must be brought down.  To correct your credit rating may take as long as a year but it will be worth it.

If you have lost all your credit you will need to start again with a secured credit card and then moving to a small bank or dealer loan (as discussed above).  Even if you have paid off all debt your credit report will keep any information reported for six years with student loans remaining for ten years.  This will make getting loans more difficult but as time goes on those accounts will not hold as much weight and then will be removed from your credit rating. 

Be careful when dealing with any company that promises to repair your credit quickly or loans that promise to help rebuild your credit.  There are people out there that prey on individuals who don't know where to turn.  think and ask questions before signing anything.

There is no real cookie cutter situation when it comes to a persons credit and the best way to put a plan to repair or build your credit rating is to talk with a professional.  A mortgage broker will have knowledge and contacts to help you understand and increase your credit situation.  

Keeping your good credit rating

Credit ratings fluctuate every time you buy something, pay down a balance open or close an account.  Almost like a living thing it needs to be taken care of.  The following are some tips that will help you keep a good credit rating:

1. Keep your balances low - your score will drop with higher balances

2.  Pay your bills on time - the longer you don't pay the lower your score will go

3. Don't seek credit - the more credit checks the lower the score

An Accredited Mortgage Professional is here to help.