Rebuilding bad credit rating

What You Can Do if Your Credit Takes a Beating

Sometimes bad things happen to good people. Credit problems can be caused by many events. 

I have had clients who have had a sudden job loss or a serious illness with a child. When these things happen, it's hard to focus on paying your bills on time.

Just because you had some trouble with credit at a certain time doesn't mean you won't ever be able to get a mortgage. If you have had a bankruptcy or a consumer proposal, you will have to wait two to three years from the date of discharge or in the case of a consumer proposal the payoff date, before you can apply for a high ratio mortgage.

What if you have a mortgage already? Sometime homeowners get behind on their bills because of an unexpected loss of income or life event and they start to accumulate balances on their credit cards and lines of credits. 

It is really important to keep the minimum payments up to date so your credit does not suffer. If possible look at refinancing your first mortgage to repay the debt. Sometimes the credit is so far behind that a private second mortgage is required to payout all of the debt.

Fortunately, with the increases in values of homes this is sometimes not too hard to accomplish.

What if you want to buy a home and have bad credit? The best option is to pay out the debt and start to re-build again. If you have an existing home, you may consider selling, paying out all or most of your debt but leaving enough to have a healthy downpayment of at least 35 per cent if the credit is already bruised. 

Sometimes, I have started my clients in a private mortgage with 25-35 per cent equity because the credit was so far beyond repair. After repairing credit for a year and the payment of the private mortgage the homebuyers are ready to move to a B type lender with a little bit better interest rate and a small or no fee mortgage. 

Most credit will take two to three years to rebuild and at that time the clients' mortgage can be transferred to a regular financial institution.

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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 since 1991 and a broker since 1997. 

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 Laurie at 250-862-1806 or visit:

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

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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