A good credit score is definitely an important factor for anyone, who wants to be approved for a mortgage. However, it’s far from being the only consideration. People are often confused and frustrated when their application is denied without an apparent reason.
To avoid disappointment, let’s dive a little deeper into what could get you the long-awaited approval even if your credit score seems sufficient.
You may have a strong credit score while battling to cover sizeable debts. Lenders are likely to dig a little deeper than your credit score to get a full picture of your credibility.
If you have a variety of credit card bills, ongoing auto payments, a large student loan, etc., they’ll compare it to how much money you are earning.
If your monthly bills swallow up a huge part of your salary, your good credit history won’t help get approval.
The length of your credit history is just as important as its quality. Lenders look at the account that has been open longest to evaluate the average age of all your ongoing accounts. Good standings for older accounts are often better than stellar standing for new ones.
By keeping your oldest accounts open, you can improve your credit score. But if your oldest account is less than one year old, consider waiting a year to apply.
Banks prefer to see multiple credit lines rather than just one. They are looking at how well you are managing your auto loan, student loan, and credit cards. If you have only one credit card, the lender can’t make up an opinion about how well you can meet serious obligations.
By using more than one credit card, you could improve your credit mix and have better chances of being approved. Tip: Use credit to build points i.e. travel etc. Also try and pay off balances at the end of each month. If you were going to pay cash anyway, use your credit and make sure you pay the balance off every month.
According to Loans Canada, in 2019, the minimum credit score you need to achieve to be approved for a mortgage is about 640. Many banks are looking for higher indications. Always try and maintain the minimum credit score.
At ShopMortgages.ca, we have decades of experience working with over 50 banks and institutions to get our clients quick mortgage approval and more importantly the right mortgage that suits your financial landscape. Contact us today for more information.