You all know that when you meet with your mortgage professional a credit bureau will have to be pulled. You are given a credit score based on a set formula which uses a number of criteria to determine how you compare to everyone else in Canada when it comes to managing credit. We have recently been informed that coming soon, your mortgage professional will be even better equipped to help you navigate the oft times tricky world of borrowing. Changes are being made to the information we will receive when we pull your credit. We will now have access to all of the credit scores which are used by the lenders.
At long last your mortgage repayment history will be reported. It seems strange that your largest debt has up to now not been included on your credit report but that is changing. Potential lenders will now see at a glance how you are managing this debt.
The 2.0 score
I often meet with clients who have been proactive and pulled their own credit. You can do so easily at Equifax.ca for a low fee. You get a copy of your credit bureau and see your credit score. It’s a great tool if you are seeking to ensure that your credit providers have been accurate in their reporting. But did you know that this score is often different from the score we get when we pull your credit? It’s true. There can be a very wide spread between the two. But now, we will see the score that you receive through this site.
Bankruptcy Navigator Index (AKA your BNI score)
This score is used over and above your other delinquency scores to determine your chances of going bankrupt. It is relied on by credit providers offering unsecured credit like a line of credit or credit card. If your current credit cards are all maxed out and you are applying for a line of credit this can be a red flag that you are in financial trouble and are seeking additional funds to meet your current debt obligations.
Trade payment information
This score gives a comprehensive snapshot of your paying habits over the last 36 months. If we can see an increasing tendency to pay things later and later or perhaps only the minimum due, a new credit provider may be concerned that you are getting in over your head.
In this day and age it is common for people not to have a home phone line and rely on only a cell phone. Now, the numbers you provide when you apply for new credit will be a part of your credit bureau. That means that past credit providers will be able to find you in case of delinquencies.
Now this one isn’t new but it is important my friends. Your cell phone providers now report to the credit bureau agencies. Pay your bill on time so that you are not negatively affected later. How can a mortgage lender feel confident in your ability to repay your mortgage on time when you cannot manage a $100/month obligation? Set yourself a monthly reminder on your phone to pay this and your other bills too. The onus is on you to make sure you meet the due by date for this and all of your bills.
What this all means to you is that your mortgage professional will now be able to see exactly what he lenders and the mortgage insurers see. We can help you mitigate any potential problems before you start house hunting or apply to refinance which can save you headaches and heartache later.
Pam Pikkert is a mortgage broker with Dominion Lending Centres – Regional Mortgage Group in Red Deer.