Why Do You Need Credit History and How Do You Improve it?
Before approving a mortgage, lenders will want to see how well you have paid your debts and bills in the past. To do this, they consider your credit history (credit report) from a credit bureau. This tells them about your financial past and how you have used credit. There are two main credit-reporting agencies: Equifax Canada Inc. and TransUnion of Canada. Your mortgage agent will get a free copy of your credit report, there is usually a fee for this service. Don’t pull your own credit report before or after you have asked a mortgage agent to do so because this will lower your score. Once you receive your credit report, examine it to make sure the information is complete and accurate.
If You Have No Credit History
If you have no credit history, it is important to start building one by, for example, applying for a standard credit card with good interest rates and terms, making small purchases and paying them as soon as the bill comes in. You need to build some kind of credit, whether it be with a student loan, car loan, or credit cards. Lenders will want to see two lines of credit to ensure that you have made your payments in the past.
If You Have Poor Credit History
If you have poor credit, lenders might not be able to give you a mortgage loan. You will need to re-establish a good credit history by making debt payments regularly and on time. Most unfavourable credit information (including bankruptcy) drops off your credit file after seven years. You should also be aware that late phone bill payments will be reported on your credit history.