Factors Impacting Your Credit Score

Lenders pay a very close attention to your credit scores and some lenders may base their mortgage rates and loan approval amounts related to your credit scores & history.

Understanding what makes up a credit score will help you to improve your credit rating

Payment history – 35%

This makes up about 35% of your score, so pay your bills on time. Missing a $20.00 payment on a credit card for example could be as bad as missing a $700.00 payment, so never miss the minimum payment. Any collections on your credit bureau can lower your score. Always be aware of whom you owe money to, even if it’s just a parking ticket, gym membership or a phone bill.

Credit Usage ratio – 30%

Try to keep your balance below 35% of your credit limit, and don’t ever go over 70%, Many consumers fall into the trap of carrying higher usage on certain cards that pay points, even if you pay it off every month

Length of credit -15%

The longer you have an account open, the better. Longer history builds a better track record. It shows you’re capable of managing credit with responsibility.

Variety of credit – 10%

It’s good to have a diverse credit (revolving credit like credit cards & lines of credit and credit with fixed monthly payments like car loans & personal loans) to show that you can handle your payments in a timely manner.

Inquiries -10%

These happen every time you agree to a “hard credit check” like when opening a chequing account with a bank, a new phone plan or any other type of loans. Mortgage Brokers will typically pull your credit once only as they can use the same credit report with different lenders.

In a nutshell, always make your minimum payments by the due date by setting up auto payments from your bank account to cover minimum monthly payment amount and try to use only 35% of credit limit on any one type of credit card even if you pay it off every month.

We at ATP Mortgage provide free credit counselling with strategies to build your credit based on your current financial circumstances.

TJ Grewal

Principal Broker/Owner

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