About Your Credit

All you ever wanted to know about your credit . .

BACK TO THE BASICS OF THE 5’CS OF CREDIT

HOW TO OBTAIN A COPY OF YOUR CREDIT BUREAU

HOW TO GET NEW CREDIT TO REBUILD YOUR CREDIT

BACK TO THE BASICS OF THE 5’CS OF CREDIT
Lenders are in business to make (not lose) money. Consequently when a bank lends money it wants to ensure that it will get paid back. To maximize the possibility of being paid back, the bank wants to make sure that there is sufficient assurance that a person can and will pay back a loan.
The lender must consider the 5 "C's" of Credit each time it makes a loan.

1. CHARACTER

Is the general impression you make on the potential lender. The lender will form a subjective opinion as to whether or not you are sufficiently trustworthy to repay the loan. Your educational background and experience in business will be reviewed. The length of time at your current employment and your current residence will be considered. The longer you have been at both, the higher you will score on the character scale.
2. COLLATERAL

Is additional security you can provide the lender. In real estate transactions this generally means the property. If for some reason, you cannot repay the mortgage, the bank wants to know that the property that the mortgage was taken out for is good and marketable real estate. A real estate appraisal will determine the value for the property in today's market. The appraisal will also indicate to the lender the type of property being financed and any deficiencies that may affect the ability to re-sell, in case of default. Generally, a property located in a Port Moody, Coquitlam or a Vancouver sub-division is considered a better risk than a farm in Chilliwack or rural Fraser Valley or one located in downtown Whitehorse, Copper Ridge, Porter Creek or Riverdale is considered a better risk than on the Alaska Highway. Simply, there are more buyers for the home in the city than for a rural farm and therefore it is easier to re-sell.
3. CAPITAL

Is the money you personally have invested in the purchase, otherwise known as your down payment. The more of your own money you invest as a down payment, the more likely that you will do all you can to maintain your payment obligations. This fact was evident during the recession of the 90s where a large number of the power of sale properties, were at one time, purchased with small down payments. Capital is also reflected by your ability and willingness to save money and accumulate assets. The higher your net worth, the more you have as a cushion for repayment in the event you run into a financial set-back.
4. CREDIT

Is the evaluation of your habits in performing credit obligations. The information about your credit history is stored at the "credit bureau" and indicates how well you paid your bills over the last 6 years. All major credit cards, auto loans, leases etc. are reported to the credit bureau. A lender will evaluate your ability to maintain your obligations and try and determine how well you live within your means. Some individuals make the mistake of not paying the minimum monthly obligations on loans and credit cards with the expectation of making a larger payment the following month. These missed payments appear on their credit report branding them as chronic "late-payers" for the next 6 years.

5. CAPACITY

To repay the loan is probably the most critical of the five factors. The lender will want to know exactly how you intend to repay the loan. They will consider your income as it relates to the loan that you are applying for. Does the monthly carrying costs of the loan represent less than or equal to 32% of your total monthly income? If it is, the probability of you successfully repaying the loan is fairly high. Prospective lenders will also want to know about any other sources of income you may have to repay the loan, if your steady income stream is interrupted.

HOW TO OBTAIN A COPY OF YOUR CREDIT BUREAU

To obtain a copy of your credit bureau contact the 2 Credit Bureaus. Their contact information is below.

Both webs sites also have lots of useful information about your credit and the credit bureau reports.

Click here to get a copy of Understanding Your Credit Score Fair Issac.

Equifax of Canada

Toll Free Phone Telephone: 1800 465-7166 (8:00 am to 5:00 pm EST)

Fax: 1 514 355-8502 Press 1 for English

Web: http://www.equifax.com/home/en_ca
Your power score/beacon score can be obtained on the web site. There is a charge for this.
Mail your request to:

Equifax

PO 190 Jean-Talon Station

Montreal, Quebec

H1S 2Z2

Ø If your mortgage has been denied phone: 1877 323-2598

TransUnion Canada

Toll Free Phone: 1800 663-9980 (8:00 am to 8:00 pm EST)

Fax: 1 905-527-0401 Press 1 for English Press 2 for Main Menu OR remain on line

By mail (you will need a pen to write down what you need to send copies of)

Web: http://www.transunion.ca/

Mail your request to:

TransUnion Canada

Consumer Relations Centre

PO Box 338, LCD1

Hamilton, Ontario

L8L 7W2

HOW TO CLEAN UP YOUR CREDIT SCORE
According to Fair Isaac, the company that compiles the scores that most lenders use this is the approximate breakdown on what comprises your credit score.

35%
of your total credit score is how your pay your bills and your payment history. So pay your bills on time.

30%
of your total credit score is based on how much you owe. Owing some money is fine, but if your balances are too large, lenders worry that you're overextended and won't be able to repay them.
15%
of your total credit score is based on how long you've had a credit history; the longer, the better. Avoid closing a lot of old accounts or opening several new ones, because that will lower the average age of your accounts.

10%
of your total credit score is based on new credit; lenders worry that you'll borrow too much money if you've recently opened a number of new accounts.
10%
of your total credit score is based on your mix of credit cards, mortgages, installment loans and other debts. Lenders are most interested in your history of managing credit card debt.

HOW TO GET NEW CREDIT TO REBUILD YOUR CREDIT

One of the most frequently asked questions is: How do I rebuild my credit, if I can’t get any? We offer a Home Trust Secured VISA Card application. Virtually almost everyone can get one including clients who live anywhere in BC and Yukon. This card reports on your credit bureau and helps re-establish your credit. So rather than apply everywhere and get declined, which is not good for your credit score, start with one easy card and repay it on time, don’t go over the limit and use it wisely. In a few months you will start to see your credit score improving! Click here to apply now for a Home Trust Secured VISA Card and a People's Trust Secured MasterCard and find out more details.

If your mortgage has been denied phone: 1 877 323-2598