How to Improve Your Credit Score

Top 3 things to do to Improve Your Credit Score!

What is a credit score? Ranging from 300-900, lenders use your credit score to help assess your perceived lending risk at a moment in time.  Lenders use your credit score to identify what type of risk you would likely be as a borrower. This score can change often as your “credit behaviour” changes.  The 3 most prominent factors which affect your credit score are as follows:

1. Previous payment history (this is approximately 35% of your score). Your past behaviour of paying off your credit accounts on time is the most heavily weighted attribute. Late payments, collections, judgements, liens, foreclosures, and bankruptcies are all part of this category and are considered quite serious. Recent events as well as large amounts will impact your score more than older events and smaller amounts.

2. Current level of indebtedness (approximately 30% of score). This part of your score considers whether you are overextended or not. Too many credit cards or keeping your accounts at or near their maximum limit can signal that you don’t manage credit very well and that you would have trouble making payments in the future.

3. Pursuit of new credit (approximately 10% of your score). Having too many open credit accounts in a short period of time is a risk indicator. The number of enquiries done on your behalf can also have an effect. Credit scores try to differentiate between rate shopping for a single loan and searching for many new credit accounts. This will help to avoid collections, which has a negative impact on your credit score for a long period of time.

****Credit scores above 750 are great and lenders are likely to offer a quick approval at the best possible rate as this indicates that a person is reliable and responsible with debt. Credit scores below 620 could mean that you would pay a premium on your borrowing rate and/or find it difficult to qualify for a mortgage.

If you have any further questions contact me today

Rob Cagnin is both an Accredited Mortgage Professional and Certified Financial Planner. His main office is located at 184 Plains Road East in Burlington. He has been servicing his clients in Burlington, Hamilton, Oakville, Ancaster, Dundas, Waterdown and surrounding areas for the past 20 years. His business is comprised of over 75% past client and past client referrals which is testament to how well he looks after his client when arranging and through out the life of their mortgages. He has in-depth knowledge of mortgages, financial planning, and banking acquired from many years of hands on experience in these fields. He and his team are deeply committed to the well-being of their clients and have the skill set and passion necessary to help them achieve outstanding results.

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