As mortgage professionals, we feel it is of the utmost importance to inform our customers as to the significance of their credit standing and how it affects their capacity to obtain a mortgage and, even worst, affects the cost of borrowing, especially in these uncertain economic times. Making some of the following mistakes can ensure that lenders will put on a hazmat suit to handle your credit report.


Remember the good old days, way back in 2007, when the streets were paved with Credit-Gold as far as the eye could see and credit cards rained from the sky? Even the creditdestitute were treated like kings by credit card companies and courted with lavish offers of unlimited credit.

Here, in the future, the world has changed. And woe betides those who ask for loans with glaring blemishes on their credit reports. An unpaid collection is apt to be regarded like a cockroach in the consommé.

What affects your credit score and in what proportion?

The Seven Pitfalls to Avoid

1. Close credit card accounts
2. Let credit cards collect dust
3. Run up high balances
4. Apply for new credit repeatedly
5. Don’t pay fine on non-credit-card bills
6. Ignore mistakes on your credit report
7. Make late payments or skip them all together

SO, WHAT TO DO?

1. Close credit card accounts

If you intend to close some credit card accounts, remember that only recently opened accounts should be considered for closing. Length of credit history is an important component of the credit score; therefore, it’s not a good idea to cancel a source that has been long-held since payment history can have positive implications for your credit rating.

2. Do not let credit cards collect dust

It is suggested that people use their cards periodically. Burying cards in the backyard or hoarding them in a shoebox in case of an emergency may also backfire. Consumers encounter two pitfalls if a creditor closes an account for non-use: The available credit is pared down and that account no longer contributes to their credit history.

3. Run up high balances

If using too little credit sends up red flags to lenders, using Loading up on high-interest credit cards isn’t a good idea even if the reward programs are attractive. Lenders want to see people use credit just right -- not too much, not too little.

It can be damaging to cardholders who run up a high balance every month on one card and then pay it off each month. Scoring systems do not take those payments into account. Restrict the amount and sources of your credit. Remember, credit is about a convenient payment method, so make sure it fits your needs. It should never be used as money you don’t have.

5. Don't pay fines on non-credit-card bills

Other business relationships that don't normally report your good payments can turn around and bite you if you decide not to pay as agreed. A lot of service providers don't report positive information. But the minute you do something wrong, they can outsource that debt to a collection agency who will report it.

Even if you never go over the limit on your credit card, being one day late on a bill can affect your credit rating. By the way, experts recommend not spending more than 35 per cent of your allowable credit limit.

6. Ignore mistakes on your report

Say what you will about credit bureaus, they do make it easy to dispute inaccuracies on your credit report. In order to dispute something on a credit report, one must, of course,check one's credit report. It's easier than it's ever been as consumers have unfettered access to their own credit information.

Unlike other issues that affect credit scores, mistakes sometimes can be remedied easily and quickly, so it's worthwhile to keep tabs on your report. By law, credit reporting agencies must provide your Consumer Disclosure report, which differs from the credit report lenders use, if ordered via mail or fax.

7. Make late payments or skip them entirely

It seems almost too obvious, but it bears stating that paying late and missing payments altogether are stellar ways to ensure that your credit score will scrape the bottom of the barrel.

If you experience cash flow problems or a downfall in your family economic situation for some time, don’t hide, it’s the worst thing you can do. Instead, call organizations that have loaned you money. Explain the situation and tell them you want to work out a repayment plan. Remember, always pay something.

The further back in time the mistakes are, the less impact they have on your credit score. Obviously, the fewer mistakes consumers make the better for their score.

We hope this information will prove helpful; should you have any further
questions, do not hesitate to call your Mortgage Specialist; he will be happy to
help you. And remember, you always play safer when you build savings; this is,
without a doubt, the best way to have a good night’s sleep.

As home prices tumble down all over the country, many renters are looking longingly at the real estate listings and wishing that they'd paid more attention to their credit rating. After several years of real estate BOOM, the bubble seems to have burst – or at least started to deflate. In May, the median single family home price was an astounding 12% lower than just one year earlier, and that trend was reflected around the country. While that's bad news for anyone who bought their home a year ago with the expectation of turning a profit, the falling price of real estate is very good news for those who have been waiting for prices to come down.

If you've been weighing the difference in price between renting and buying, the market has shifted enough in favor of buyers that the time to buy is now. Interest prices are down as the Feds try to stimulate the economy and encourage people to buy. Home prices are down as sellers have their homes revalued for the realities of the current market and willingly accept far less than they would have last year at this time. When you combine the two, you'll find that the cost of a mortgage PLUS taxes is actually less than what you're paying in rent.

Unfortunately, there's another reality at work in the falling market prices as well. New regulations surrounding the sub-prime mortgage market and the recent rise in defaulted mortgages and foreclosures have made lenders more wary of handing out bad credit mortgages – and made it far harder for prospective home buyers to secure any mortgage at all. The meaning of "bad credit mortgage" has changed significantly in the new home buying market, with a 'bad credit rating' being considerably higher than it used to be.

Still, all is not lost for those whose credit scores disqualify them for a traditional mortgage from a bank. Many finance companies are still quite willing to make loans to people whose credit is less than stellar, and most will offer you advice on how to get your credit into better shape, or what you need to do in order to be accepted for one of their bad credit mortgages. If your mortgage application has been turned down by a bank or major home finance company, here are some suggestions that may help you quality for a bad credit mortgage.

1. Shop around beyond the banks.
Banks are traditionally "safe" lenders. They don't take chances with their money, and lower credit scores are risky. While they'd started taking chances as the housing market exploded, the sub-prime mortgage collapse has sent them skittering back to their safe little ledge.

There are exceptions, though. If you have a long-term relationship with your bank and maintain multiple accounts with them, by all means check with your banker first. You may get consideration based on your history with the bank despite other credit snafus. Most people, however, will do better with finance companies and mortgage companies.

2. Increase your available down payment.

Lenders may be willing to make a loan to someone with lesser credit if they are seeking a smaller loan. The best way to reduce the amount that you need to borrow is to provide a larger down payment amount. If you can put down 10-20% of the total house price as a down payment, most lenders will take you far more seriously.

One of the recommended strategies for raising the amount of your down payment is to borrow or get it as a gift from family or friends. Be aware that many lenders are now looking at how long you've had that down payment money when they do credit checks. Obviously, money that you've saved is evidence that you're able to manage money, and will be a persuasive argument to lenders that you're a better credit risk than your credit score suggests. On the other hand, a large enough down payment may bring you down to a monthly payment that the lender is comfortable offering.

3. Get multiple quotes for a bad credit mortgage.

Another part of shopping around is comparing interest rates and terms. The best way to do that is to get quotes from several different finance companies, but there is a danger in doing that – multiple requests for your credit report can put a ding in your credit rating and make it even harder to get a loan. When you contact a finance company to ask about a loan, make it clear to them that you are shopping for the best possible interest rate and ask them to do a quote credit check, which will show up differently on your credit report than a full credit check.

Don't get discouraged if you can't get even a bad credit mortgage right now. Talk to the Montreal Mortgage broker about how to improve your credit score in the eyes of their company. In many cases, you can follow their advice and reapply in as little as four months with better results.

Basics

There are a few simple steps that you will want to take when getting ready to apply for a home Montreal mortgage, whether this is you are a first time home buyer or an experienced home buyer. They include; credit preparation, acquiring the services of a Montreal loan specialist (especially important if you are a first time home buyer), establishing a relationship with a real estate lawyer, researching title (Title company) insurance, finding a property appraiser.

Credit preparation

You will want to get a recent copy of all three of the major credit bureau reports and your scores before applying for a home mortgage loan. Your credit score can make many thousands of dollars of difference in the cost of your home. You will want to go over each report line by line to make sure it is accurate. Then you will want to see what you can do to improve your score. Decreasing the total amount of debt owed is one of your most important steps to take. Along with decreasing debt load, making sure that your payments are in on time, insuring that you do not miss the dead line is a small step that will help in acquiring the better loan rates. It is very important to make at least the minimum payment due on all outstanding creditors. This is essential in improving and maintaining a good credit score.

Loan Specialist

A loan specialist is important for understanding the types of home loans that are available to you. Their expertise in finding good rates that you are eligible for can not be overstated. The specialist should inform you of not only the types of home mortgage loan that is available in the immediate market but also what documentation is required for each type of loan or lender. This specialist needs to be someone who will take the time to understand your needs and goals. They should be open to the many different creative financing techniques that can save you time and money.

Real estate lawyer and title insurance

A lawyer is required to insure that there are no clauses in the loan home mortgage loan that could go against you. They will be the one to insure that the proper documentation and paperwork says what you need it to say to protect your interests. This is a step you do not want to try and save money by avoiding. Title insurance is the legal forum that keeps your property cleared from unscrupulous or missing documentation that might mean that someone else could make a claim against your property causing you court and lawyer fees along with the real possibility of losing all that you had invested.

Property appraisal

A property appraisal is a requirement for a home mortgage loan. This accurately establishes the value of the home. Most lenders insist on an accurate and up to date property appraisal before determining the amount of the loan that you can obtain. You also should plan on investing in a property inspection for your protection regarding the condition of the property.

Finding the best information and resources possible should be a definite part of the preparation for your home loan. You can find accurate hints and tips at Multi-Prets Montreal mortgage specialist or Quebec Mortgage Loan.