Bad to Good Credit in 90 Days!
How to obtain a mortgage with a low credit score: private mortgages in Surrey & Vancouver
Getting a mortgage when you have a bad credit score in Surrey & Vancouver
A credit score is a number to rate a borrower’s creditworthiness. Naturally, the higher the credit score the more creditworthy a borrower. To determine whether a borrower is a good risk, lenders look at his credit score that can range from 300 to 900. Credit scores help lenders make decisions on whether the applicant for credit is a good credit risk. The risk might involve granting a personal loan, auto loan, credit card or a mortgage. All a lender has to know is your credit score to determine if he is willing even to look at your loan or a mortgage application. Only if you meet that particular lender’s guidelines of minimum credit score will the lender look at other factors that must also be met to approve your credit application.
How is a credit score determined?
If you want to improve your credit score, then first you need to know how a credit score is determined? A credit score is determined by how long your credit file has been established; your total credit limit; the amount of debt you owe; what percentage is your debt to your total credit limit or your debt to credit limit ratio (DCLR), the number and kind of inquiries in last 90 days; your payment history; your late payments and how many days and for how many times you have been late; your past due accounts; collections, settlements, consumer proposal, bankruptcy, etc. The credit bureaus even have a separate score to determine how high or low is the possibility of you filing bankruptcy. Contact us if you have questions on credit scores.
Which credit scores mean the credit is good and which credit scores are considered a bad score?
There are many different credit score models used by creditors. But no matter what model a lender is using, the goal is always the same, namely to predict whether a borrower will make timely payments. But keep in mind a borrower can have an 850 credit score and still get turned down by a lender. Because either his debt ratios are too high or the security did not meet the lenders’ underwriting guidelines. Credit score only tells a lender the willingness of a borrower to make timely payments. Debt ratios, on the other hand, prove to a lender the ability of a borrower to make the timely payments. A higher credit score means you have demonstrated good money management and you are a good credit risk.
How does a bad credit/private mortgages in Vancouver & Surrey work?
A high credit score is not easy to achieve and takes responsible financial behaviour and financial discipline to achieve and maintain. If your credit score is not good enough, you can always apply for private mortgages in Vancouver. If you are in the market for a bad credit mortgage, that’s where a mortgage broker can help you cut to the chase as he/ she knows which lenders will consider a score above 500 as still acceptable. For private mortgages in Surrey or Vancouver, lenders look to security and not the credit score. So long the borrower has enough lendable equity in the house, he can get private mortgages in Vancouver even with a credit score as low as 400.
Credit score rankings and private mortgages in Vancouver
Below is the low down as to what the scores stand for as far as the creditworthiness of a borrower is concerned. Provided you meet all other requirements, the higher credit score not only gets you approved but may also get you a lower interest rate and better terms. These are approximate numbers as each lender has their own interpretation.
Very Good: 725 - 759
Average: 600 - 659
Very poor: 1 - 499
G: New to Canada/foreign investor
Bad credit mortgage and private mortgages in Surrey & Vancouver
As you can see that a score between 1 to 599 is considered a bad credit score for most lenders. So, when you see mortgage brokers advertising “Bad Credit Mortgage” they are referring to borrowers that need private mortgages in Vancouver or in Surrey but have bad credit or a credit score less than 600. So, who needs bad credit mortgage? Obviously borrowers with bad credit. Somehow the term, “Bad Credit Mortgage” has come to mean that. Private mortgages in Vancouver or Surrey are a temporary solution and they provide the borrower with time to fix the credit or whatever else that needs to be fixed. Private mortgage borrowers with bad credit use the equity in their house as a piggy bank till they run out of the equity and either sell or lose the house in foreclosure.
Tips on improving your credit score
Here are some good tips to improve your credit:
- Hire a Credit Repair Agency: It is worth hiring a professional to improve your credit score. (Especially if you are looking for possible private mortgages in Vancouver & Surrey.)
- Pay your payments on time: Make your payments seven days in advance.
- Disputes with creditors will ruin your credit: Even if you are disputing a bill, keep up the payments.
- Consumer proposal / Bankruptcy. Unless you owe a million dollars or more, stay away from filing Consumer Proposal or Bankruptcy.
- Settlement: This is a bad idea. You save very little and damage your credit.
- Credit card balances. Keep your credit card balances below 50% of your limit. Better to pay-off the balances each month.
- Credit Inquiries. Applying for multiple credit accounts within a short period of time will impact your credit score.
- Contact Equifax and TransUnion. If you think there is an inaccurate reporting on your credit file, contact Equifax and TransUnion and request a free copy of your credit report.
Jeet Singh is a writer and a mortgage adviser with crownfunding.ca. He can be reached at 778-320-9494.