• Improving my Credit to Get a Great Mortgage

    May 13, 2020
  • Improving my Credit to Get a Great Mortgage

    By: Robert Floris, Lead Mortgage Broker with 30 years of mortgage experience

    Stuck with garbage credit?
    Paying higher interest than you need to?
    Are you just spinning your credit wheels?
    There is a better way to improve the credit and improve your financial life.
    Let’s begin.

    Katie was a good person who worked hard, was a good parent and a good wife. Yet, life did not seem to give her family a break. Unfortunately, her husband Mike got hurt and was no longer able to help with finances. The money problems began. Although they had a lot of equity in their home, they were forced to get a high interest second mortgage being paid with interest only payments. The reason for the second mortgage was poor credit. Not only had life been cruel with Mike’s health, but bad credit did not assist in improving their situation. Here is how we are assisting them to improve their financial well-being.

    8 Simple Steps to Improve Your Credit and Life

    1. Negative Credit? Deal with It.

    Many clients refuse to pay collections, judgements or tax liens over principal. They believe they were not in the wrong. I get that. The problem is that the longer it is not settled, the more you pay in terms of higher risk, higher interest loan. Here is the issue, the credit problem is not going away and you paid more in interest than you would of if it was settled at the time.

    Lesson: Attack and face your negative credit.

    2. Buying Security – Get a Secured Card

    All right, the negatives have been dealt with. Let’s begin with some positive areas to improve your financial standing. There is no better way than with a second credit card, especially with a major Canadian bank. Why? It scores higher. You give the bank $1200 as security and they give you $1000 credit card. It’s easy and after a year, as long as your credit it positive, you get your $1200 back. A year later, you are smiling.

    Lesson: Attack to get your secured credit card to begin your credit turnaround.

    3. Already have a Credit Card? Do not Close.

    Equifax and Transunion improve credit scores when you have depth of credit instruments. The more credit you have and the ability to manage the debt will score you higher. Even if the credit cards are for limits of $300, like Capital One, do not close it.

    Lesson: The more credit, the merrier your score.

    4. Incorporate Different Kinds of Credit.

    Credit cards, lines of credit, mortgages and installment loans are better for your financial standing. As described above, depth of credit enables way better scores. Why? More types of debt prove your ability to manage your finances.

    Lesson: A greater mix of credit items heighten your score.

    5. Utilization: Staying in Control

    Having a credit card limit on revolving credit is a test. The best scores are achieved when you use 30% or less of your total limit. Thus, if my limit on my visa is $1000, the best scores are achieved when I keep my balances at $300 or less. As your balance goes higher, it affects your score in the opposite way. Larger balances equal lower scores. The reason is quite simple. The system assumes you are in trouble and cannot manage your money.

    Lesson: The higher the utilization rate, the lower your credit score.

    6. I Would Like my Money on Time

    Have you ever been a landlord or have lent money to a friend? What happens if the cash is not paid on time? You don’t think so highly of them, do you? Credit agencies are thinking the same thing. If you do not pay on the due date, you broke your promise and thus we will lower your score automatically. Continue to be tardy and they will punish your rating.

    Lesson: Creditors want to be paid on time, just like you.

    7. Not Good: Too Many Inquiries on Your Credit

    Every time your credit is checked, you lose between 3 to 5 points on your score. Why don’t creditors like individuals with many hits? It is easy. Studies show people with more than 6 hits on their bureau are 8 times more likely to default. It makes sense to me, too many checks show desperation. Only apply for credit when you need it.

    Lesson: Too many hits is not going to help your credit situation.

    8. How do I know my Credit Score?

    So, you want to check your credit score? Easy, here are two free resources to help.

    • Borrowell
    • Credit Karma

    They are both free.

    Lesson: You have no excuses to not know how you’re doing with your credit.
    Helping mortgage clients get over the hump is great when their credit score is higher. This process is what we teach at our Mortgage Architects office and as we have demonstrated, it is not that hard to achieve. Go take care of your credit score future.

    Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. Robert has been in the mortgage industry for 30 years, including working as a sales manager for a major chartered bank. Over his career, he has personally lent over 1 billion dollars and proudly continues to advise and tutor his clients.If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

    If you would like to apply for a mortgage online, please follow this link.

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