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Finance

High credit score for borrowing

Part of a Lender's decision to grant credit is an assessment of your past credit history which is why it's important to build credit once you arrive to Canada. Depending on your circumstances, some people already have a credit history while others may need to start fresh and build a new one once they arrive.

Many Lenders use credit bureau scores as a key part of this assessment. Credit scores are a statistical method of predicting a consumer's financial risk over a period of time. Your previous credit behavior is used to determine your credit score which is primarily derived by payment history, outstanding debt, credit account history, recent inquiries
and types of credit on your credit bureau record. The two credit reporting agencies in Canada—Equifax and TransUnion, determine your credit score on a scale from 300 to 900 – the higher your score, the better.

“A credit report is a summary of your credit history. It impacts your ability to borrow the funds you may need to purchase a first home, buy a car or other such investments. It is important to manage your credit report as part of your overall financial picture.”

Once established in Canada, the five main factors looked at by lenders are:

  • Credit history: Do you have a good credit score and positive credit history? Lenders review the times you've borrowed in the past and your payment history on your credit cards, loans and mortgages.
  • Character: How much care and responsibility have you shown in managing your finances? Do you pay your bills on time? Do you have a steady job?
  • Capital: What's your net worth? Do you have any savings, real estate, investments or RRSPs?
  • Capacity: What are your current debts? Do you earn enough income to pay them off and take care of your other financial responsibilities?
  • Collateral: Do you have assets? These are items the lender can collect if you default on payments such as your home, car and investments.


A few additional tips to keep in mind:

  • Once you have a credit score, you should review your credit report at least once a year to make sure it is accurate.
  • It's a good idea to request your credit report two to three months before applying for a mortgage or large loan. This way, if you notice an error on your report, you'll have plenty of time to correct it.
  • If you do find an error in your credit report, contact the credit reporting agency immediately to have the error corrected.


For further information please feel free to call us at 250 862 1806.



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About the author...

Laurie Baird is a Mortgage Broker with Verico Complete Mortgage Services. She has been in the mortgage business for 17 years starting as a lender with Royal Trust. She later worked at the Royal Bank as a Mortgage Consultant and 11 years ago became a Mortgage Broker. As a Mortgage Broker she is able to match her clients' needs with a lender who will provide them with competitive rates and products. Laurie has a Bachelor of Education degree from UBC.

Contact her at 250-862-1806 or by fax 712-0209 or visit:
http://www.okanaganmortgages.com/

Visit Laurie's blog at: http://www.okanaganmortgages.com/blog.html




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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet presents its columns "as is" and does not warrant the contents.


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