2012: Is This The Year You Finally Buy A Home In Toronto?
With the passing into a new year comes new goals and resolutions, in an effort to make this year a great one. Maybe one of your New Year’s resolutions was to finally buy a home this year or at least get yourself in a better position financially so you can realize your homeownership dreams. If you want to start looking for a new home by the end of this year, there is no better time to patch up your credit than right now.
Fix your credit to get yourself into the best position to buy a Toronto home.
Your credit history affects your mortgage a great deal. If you have poor or no credit history, you may not be able to get a mortgage at all. In addition, a better credit history will get you more desirable rates.
If you have no credit history, you can begin building your credit by applying for a low-interest credit card through your bank. Use this credit card for small purchases, and pay it off each month.
If you’re unsure of your credit standings or worry about having poor credit history, you should get yourself a copy of your credit report. The two major credit reporting companies in Canada are Equifax and TransUnion.
You are entitled to one free credit report per year from these companies, and you must mail in your application and copies of your required identification in order to get them. Alternatively, both companies offer online versions for about $20, while you can also get your credit score for a few dollars more.
Avoid “free” credit report companies, because there really isn’t any such thing except for your one free credit report per year from the aforementioned credit bureaus. Most of the “free” credit report companies will make you sign up for a monthly credit monitoring service in order to get your free report.
Knowing what your lenders will see with regards to your credit report is a great place to start when preparing to buy a home. First, check your report for any mistakes, such as accounts you’ve never opened that are under your name. Mistakes on credit reports are common, and credit bureaus usually have tools on their websites so you can report inaccuracies, mistakes or fraud.
The credit report itself shows your history with each form of credit that you have, with regards to payments being made on time, late or not at all. TransUnion reports, for example, contain a colour-coded chart listing all of the months in a year, where red months were missed payments, green months were on-time and pink months were a certain number of days late. You may also have a score and rating. Your score will be a three digit number ranging from 300 to 800 or higher (the higher the better) while your rating will consist of the letter “R” followed by a number (the lower the better). For example, R1 is a great rating whereas an R9 is a bad debt or collection.
Now that you have your credit report, you can track your progress throughout the year and see your credit improve once you take the steps to fix it. The best way to improve your credit is to make on time payments on all of your loans or credit cards – even just the minimum payment if you can, as long as it is on time. You can even set up automatic monthly payments through your bank so you won’t forget. Other steps to take include lowering your balances on your loans (if you carry a balance over 50% of your loan, you’ll lower your score) as well as avoiding applying for new credit, because this also lowers your score.
2012: Is This The Year You Finally Buy A Home In Toronto? is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale