Credit Bureaus – Optimizingyour assign reason - rules - conception 2

If you’re not convinced yet of the importance of not only knowing your credit score, but also of working at optimizing your credit score, consider this…

If you are closing any type of personal account, keep the paperwork and confirm that it is actually closed a few weeks later. It’s not uncommon to meet individuals who assumed that an account was closed but a few dollars was some how left remaining. For example, interest may have accrued on the day the account was closed but was not included in the payout value, leaving the account holder unaware of the remaining amount. What results is a late payment report on the bureau unbeknownst to you. This situation can compound itself if you have moved from a different province, and a collection may be registered.

In the last article we discussed the importance of knowing your individual credit score found within your credit bureau. We also touched on the importance of knowing what institutions are making credit inquiries and finally-but most importantly-correcting any mistakes you see on your bureau. In this article we will discuss a few tips on how to optimize your credit score, based on what we see on a day-to-day basis.

A final thought

Essentially, due to the crisis south of the border, mortgage products that may have been available last year to those with low beacon scores are no longer available. Don’t let this be you!

3. Lenders like to see borrowers with old credit accounts versus new ones, as it demonstrates they have responsibly managed the same accounts for years. Although, don’t get carried away! Most experts suggest you have no more than 1-3 credit cards, even if you have no debt, as it helps establish a good credit score. For those of you with more than three credit cards (which is not uncommon) consider a debt consolidation strategy-perfect for when you’re thinking about refinancing your home.

Don’t be tempted by free promotional gifts!

Those credit offers may be tempting, but did you know that each application you submit results in another credit inquiry that can in turn reduce your beacon score significantly? If you want to establish good credit or re-establish credit, we recommend you do everything you can to keep lender and creditor inquiries to a minimum.

4. Are you looking to re-establish credit? Start with one low value credit card, pay your groceries with it and then pay it off at the end of the month. Repeat this process for a few months and see your beacon score slowly increase.

A word of caution – errors when closing a bank account can affect your score!

Managing your credit cards effectively

2. We also advise you to avoid exceeding the credit limit on your credit cards. Keeping your account balances below 75% of your available credit may also help your score.

If you have a low beacon score your mortgage options are fading

Over the last five to six months we have seen more than five lenders close their doors to sub-prime mortgage applications (sub-prime accommodates those individuals with low or no beacon scores). It’s important to note that these are by no means small lenders-these are large national and international companies.

In these situations-particularly when looking for a new home or refinancing a home-talk to your mortgage professional. Some lenders will take these issues into consideration when qualifying you for a mortgage.your assign reason - rules - conception 2

1. This may seem obvious, but we can’t stress it enough: pay your credit card and automotive debts on time. Department stores regularly report late payments on an individual’s credit bureaus, which in turn can dramatically reduce their beacon scores. If necessary, set up automatic payment plans through your bank so that no payments slip through.

That’s life…

The reality of life is we all go through hard times at some point-be it a divorce, a death in the family or unemployment. There are times when paying bills on time may not be foremost in our mind, or there simply may not be enough money available. Unfortunately, this will affect your credit score.

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