Your financial health is reflected by your credit score, which is determined by a mathematical formula. Lenders use this to help establish if you are a risk or not. If you are applying for a real estate mortgage, a good credit score is very important. A lender will look at your willingness to pay in addition to your ability to pay.

According to the Financial Consumer Agency of Canada, your credit score is determined by the following:

• Bankruptcy: Has a collection agency contacted you about unpaid bills? Have you declared bankruptcy in the past 7 years?
• Your payment history: Do you miss payments? Do you pay your credit cards on time?
• Your account history: How long have you had credit?
• The type of credit you use: Do you have a high balance and/or lines of credit on your cards?
• Inquiries about your credit score: How often do people ask about your credit score?

Each of the above factors is weighted differently for real estate finance, the most important being the amount of your outstanding credit balances, bankruptcy, and your payment history.

Before applying for a real estate mortgage, it’s a good idea to get a copy of your credit report, so that you know what your score is beforehand. Typically, you should receive a report once a year to ensure that the information that has been collected is accurate.

Ian Hawkins and Cindy Ryerse have been helping people sell and buy real estate in the beautiful Georgian Triangle for many years. If you’d like our expert assistance, please get in touch with us.