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Improving your credit score is the Key to Your New Home

by

Jamie Hanson

What is a Credit score? Let’s look at the definition of the same.

“A credit score is nothing but a numerical term based on a statistical examination of an individual’s credit files, it represents the creditworthiness of that person. A credit score is primarily dependant on credit report information and facts acquired from credit bureaus”.

For any Canadian citizen, the credit report is a most essential record that is used for assessing the persons performance, thus it should be done perfectly and correctly.

The credit scores are determined relying on some factors like: –

oPayment record which comprises of bankruptcies, dues, wage attachments and pending bills and this make 35% .

oA sum to be paid is 35% that involves sums owed on accounts, percentage of balances to total credit limits. Carrying less than 35% of maximum credit amount available is actually incorrect as it weakens your credit score.

oDuration of credit history is 15% that involves the time since accounts opened up plus the time from when a transaction was done on the account opened up.

oNew credit is 10% which includes the number recent inquires made about the credit and the number of accounts opened recently .

oTypes of credit are 10% that involves various kinds of accounts like credit cards, retail accounts, mortgage, etc…

There are certain steps which help to improve your credit score: –

oHave a copy of your credit statement. Once your review and evaluate your credit report, you can rectify it if there are any mistakes.

oMany folks stop paying out their mortgage transaction before they stop paying out their credit cards as they should pay a substantial amount of money. This is not good and will affect the credit scores adversely. As well the firms will not give the credits as you hold a negative reputation caused by late transaction on your mortgage.

oYou can open up your new credit accounts or make payments of your pending bills on time, if the present credit record is doubtful .

oOwning 5-6 kinds of credit cards or keep credit accounts open up that you usually do not use as it adversely influences your credit scores.

oHaving a credit card or installment loan helps to improve your credit scores but you need to have less balance and pay it off on time.

oYour amount must be about 25% of your credit limit.

oTry not to transfer your credit card balance to another lower rate cards as this may have a hit on your credit score.

Re-establishing your credit card after one year of bankruptcy is tricky but a established credit card would be preferred for which every $1 of deposit you get $1 credit. There is no risk to the issuer and will be helpful to re-establish the credit when required to apply for a mortgage.

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Article Source:

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