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Friday, 18 May 2012

Yes, you can reestablish your credit rating

When applying for a mortgage, your credit rating is extremely important. It has the ability to dictate the type of mortgage and interest rate you will qualify for. For those who have experienced financial hardships such as bankruptcy or simply bad credit, their credit score can be seen as a bump in the road to home ownership. Thankfully, it doesn't have to be that way. This Financial Post article offers some tips for those looking to restore a credit rating.

First and foremost, start out small. Borrowing is based largely on trust, and applying for a large line of credit right away gives a lender the impression the bad credit cycle will start all over again. A secured credit card is a good place to start. In this case, you make a deposit to the bank to cover the credit limit. In essence, you are using your own money but using the card helps to build credit history.

It is easy to fall into the trap of using your new credit as much as possible, but this tactic is counter-productive. Try to keep the balance of any credit card below 30% of the limit, and never underestimate the importance of making payments in full and on time. It is also a good idea to avoid applying for multiple credit products. Each time an application goes through, your credit file is accessed. This also reflects negatively on your credit score.

For more helpful tips on reestablishing your credit rating, contact a qualified Mortgage Broker.

To read the full article from the Financial Post, click here.

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