Give yourself some credit

When your mortgage application is being considered, your lender will look at your credit habits: do you pay your bills on time? Do you tend to get over-extended on your credit card? These habits are reflected in your credit rating. In order for your lender to assess your borrowing profile, you’ll need two revolving sources of credit that are each at least two years old.

Worried that some sloppy financial habits might keep you from a great rate or even from getting a mortgage? Here’s the thing: you can give yourself some credit. This important factor in your mortgage negotiation is entirely within your control. Start now to develop good credit habits:

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• Pay every bill on time. That one habit is your single biggest game-changer.

• Don’t run up your credit cards. Use the 50% rule. If your limit is $5000, never let the card go higher than $2500.

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• Don’t ever let any bill go to collections, even if it’s for a small or disputed amount. These black marks on your credit are hard to erase. If it’s happened, be prepared to explain why, and be sure it’s paid in full and reported to Equifax.

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• If you’ve ever been bankrupt or under a consumer proposal, you’re going to have some extra challenges. You’ll need to have been discharged for two full years. And you’ll need to prove that you’ve re-established credit after the discharge, with at least two re-established revolving credit items and two-year history of satisfactory repayment. Strong income and downpayment will help.

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