Credit Scores and Real Estate

A credit score is a prediction of your credit behavior, such as how likely you are to pay a loan back on time, based on information from your credit reports. It is a three-digit number that ranges from ranges from 300 to 850 and represents how good you are at paying off your debts.

Knowing how likely you are to pay your bills on time is important when it comes to applying for a credit card, a car or a loan on a mortgage. In a nutshell, you should do all you can to ensure your credit score is fair, good, or excellent before applying.

It is very easy to let your score slip into less than favourable numbers and improving credit scores can take time. Here are some tips on how to increase your score so you can be one step closer to the home of your dreams.

• Always make your payments on time– Tracking your bills and setting due-date alerts for upcoming bills can help you avoid missing payments and keep track of what’s already been paid.
• Communicate with Lenders- If you don’t have enough money in your account to make your monthly payment, contact the lender right away so it won’t be flagged and bring down your credit score.
• Make at least the minimum payment- It is very possible to ask your lender to set a minimum amount if you can’t pay the full amount that you owe on a bill.
• Don't skip a payment even if a bill is in dispute –Billing errors happen, but while you’re waiting for things to be corrected, you still have to make your payments.
• Leave wiggle room –Try your best to use 30% or less of your available credit. It’s better to have a higher credit limit and use less of it each month. If you use a lot of your available credit, lenders see you as a greater risk.
• Consider keeping an older account open even if you don’t need it -The longer you have a credit account open and in use, the better it is for your score. Your credit score may be lower if you have credit accounts that are relatively new.

Individuals with better credit ratings are considered lower-risk borrowers, with more banks competing for their business and offering better rates, fees, and perks. For more information, or to have your credit score checked before you enter the real estate pool, check our Preferred Suppliers page.