Your Credit Bureau
Important information you NEED to know about your credit bureau…
Your credit bureau tells a story. It tells a story of how you manage your credit. From your past, right up until the present – your credit bureau has a long memory and will tell all to everyone you give permission to look at it. From this point forward, no matter how good or bad your credit has been, and if you follow the instructions below – you will never have to worry about receiving a bad credit review - EVER! Here are the ins and out’s of your credit bureau…
Your credit bureau has a score on it. This score tells a story of how well you have used your credit privileges in the past, and predicts what your credit will be like in the future. Everything from where you have requested credit, to your credit limits and how much credit you currently hold on each credit line. It will tell if you have been bankrupt (unless it’s been over 7 years since you’ve been discharged), and if you have anything that has gone to a collection agency. It will indicate how many individual credit lines you have, as well as how many “joint” accounts you share. It will provide your address, your last place of employment, and your birth date.
The issue of having your credit pulled multiple times, and having your score affected is one of the most common concerns when it comes to dealing with your credit bureau. The reason is because every time you have your bureau pulled by a credit grantor, a couple of points come off of your score. Consumers are encouraged to shop around, but every time they seek credit, it’s another hit! That’s not necessarily the case these days. Most credit scoring models, including Equifax, are treated in a special manner. Multiple inquiries for the same “type” of inquiry (i.e. auto or mortgage) regardless of the number of inquiries within a 14day period, only count as a single inquiry.
WHAT ABOUT BUREAU DISCREPANCIES?
Equifax is not immune to human error. Although the bureau itself is kept on an electronic database, errors can happen on the “submitting” end of things. The good news; if there is a discrepancy on your credit bureau, you can have it fixed! A phone call, or an email to Equifax with an explanation and supporting documentation can get your bureau information updated and correct. One thing is for sure – when you’re late on a payment, it WILL show up. On the other hand, sometimes the creditor is not always most efficient when it comes to reporting to the bureau and letting them know that a payment has been made, or no longer exists.
GOOD CREDIT, BAD CREDIT
You may have discovered by now that having good credit equals more opportunity to receive a better review from a lender – in turn giving you a better chance to receive a better interest rate. This is true. But what about the bad credit and the no credit situations? Not everyone can have perfect credit, all the time. The lending community knows this and have arranged for situations like this. Depending on just how bad your credit is currently, most situations can be dealt with. If your credit has seen better days, and you want to make a purchase on a home or refinance your mortgage, there are “higher risk” lenders that will look at lending to you. Always remember – the higher the risk, the higher the interest rate. This is viewed to be the “penalty” of having poor credit. As brokers, and placing your mortgage with higher risk lenders, we view it as a temporary loan. We want to see you out and in a better mortgage as soon as possible, but only when the time is right. That time will depend on the terms of the lender, and how much the client works on bettering their credit position.
WHAT’S THE MATTER WITH NO CREDIT??
Having no credit to report can prove very difficult to secure a mortgage. Some may say that having bad credit is better than posing no credit at all. The no credit situations obviously have a “high risk” lender written all over it. But, here’s the good news; we deal with lenders that will take “off bureau” loans or payments as proof of credibility. A total debt (or debts) totaling $5000, opened for a minimum of 12 months of “non-bureau” items can be included providing we can obtain a written and verbal confirmation. This includes any loans, installments, rent, mortgage payments, etc.
Pulling your credit bureau is a mandatory in securing a mortgage for you. If you have any questionable item that you feel may hold you back from securing the very best rates, we suggest that you pull your own bureau through Equifax FIRST! You pay a small fee for pulling your own bureau, but we highly recommend it. You can obtain your bureau through the following link: http://www.equifax.com/EFX_Canada/. If you get to see what we will see before it hits our computers, you will be better prepared in knowing what to expect. Furthermore, any discrepancy you see can sometimes be fixed before we submit it to the lenders; this will better equip you for a more comfortable interest rate in the long run.
HOW TO CHANGE YOUR BRUISED CREDIT RATING, TO A GREAT CREDIT RATING
So you’ve gotten into trouble in the past – not paying off some loans or credit cards. It happens. Here’s the problem; a credit bureau does not have feelings, it just has facts. Everyone has their own personal reason for getting into a little credit trouble. Unfortunately, unless you can prove otherwise through solid documentation that the bureau is incorrect, you have to start building your credit back up.
If you have any “bad debts” that are left outstanding (i.e. – collections that are not paid off, written off bank accounts, etc.), you need to pay these off – FIRST! By doing this, you are already starting off in the right direction. When a mortgage lender sees that you are making an effort to fix your past discrepancies, they see you trying to build your credibility back up, and where better to start than to fix your past mistakes?
So now you are all caught up on past mistakes. You also need to re-establish yourself with new and different credit lines. This could be tricky depending on how bad your past has been. Not every credit grantor may be chomping at the bit to give you credit! Well, I can see their point to a certain extent – but hang on…
Credit is what makes the world go around – without access to credit, your purchasing power as a consumer is weakened. How do you get your credit back if no one will allow you a credit card or a loan? A Start with small credit allowances, and work your way back up.
You need to start building credit back up, but you also need to be careful which credit line to choose. Why? Not every credit card company reports to Equifax, therefore potentially making the choice irrelevant. You need to have your credit companies report to the bureau to help you re-establish your credit, or a mortgage lender will not see a history. Choices that come to mind are gasoline cards and department store cards. Although these are viable “credit” cards, the disadvantages of owning them outweigh the advantages by far. Gasoline cards do not report to the bureau, UNLESS you are delinquent on any payment. Department store cards allow you to carry a credit limit below what a mortgage lender is interested in seeing. They want to see a higher than $1000 credit limit with credit cards. Department stores will usually only carry about $500 credit limits on their cards. So where do you turn??...
The best way to build your credit back up is with secured credit cards. How does a secured credit card work? You start by setting your own credit limit because your credit limit is equal to your security deposit. Let’s say you want $1500 as your credit limit. You pay $1500 into the security deposit and your set to go. You also earn interest in this account for as long as it’s open. The best way to get a hold of a secured Visa card is through Home Trust Company. Attached below is a link that will take you to the Home Trust Secured Visa page. There, you will find all the information you will need on re-establishing your credit through a secured credit card. CLICK ON THE LOGO BELOW to get started!
Re-establishing your credit cannot be completed overnight. There are definitely strategies out there that will benefit faster than others. By going the “secured credit card” route you are headed off into the A1 credit rating within about a year’s time; and THAT is not a bad timeframe to give yourself.
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