Improving Credit Rating for Mortgage

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If you are planning to get a mortgage to buy a new house or a car, make sure your credit rating is good. This three digit number, generated from your credit report, plays a key role in not only getting a mortgage approved, but also plays its part in determining the interest rate. If you have a low credit score, utilize the tips mentioned below to improve your credit ratings in the shortest possible time.

  • Make sure you are registered with the local government at your current address. If you are not registered with the local government, you can face unnecessary delays in getting your mortgage approved, and if the lenders can not confirm your residential address, they may turn down your loan requests.
  • Make sure that the credit information stated in your credit report is 100% correct and up to date.
  • If your credit report is showing financial links to other people who are no longer related to you, such as your ex-business partner, or your previous landlord, ask the credit reference agency to remove them from your records.
  • Close all the bank accounts that you no longer use. Several unused credit accounts may negatively affect your credit ratings. It also makes you more susceptible to fraud.
  • If you have faced credit problems in the past and those issues were due to special circumstances, such as losing your job, death in the family, a disability etc, explain this on your credit file by adding a notice of correction.
  • If you have any court judgement on your credit file, make sure you pay it off as soon as possible. Even after paying off the debt, the court judgement will remain on your credit file for some time (3 to 6 years), giving a negative impression to lenders. What you can do to improve your credit rating in this situation is to ask the court for a Certificate of Satisfaction after clearing the debt. Present this certificate before a credit reference agency in your city and the agency will update your file to show that the court has been satisfied. This will tell your prospective lenders that you are not a defaulter.
  • Similarly, the record of your missed payments also remains on your credit file for at least three years, but you can improve your credit score by asking your previous credit lender to add a Note of Correction to the file explaining the circumstances that made you miss the payments or pay late. Also make sure you do not miss any more payments or delay them.

Click here for our list of the top mortgage lenders in Canada.

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