So, how’s your credit rating these days? Most of us don’t have a clue. But it pays to check your credit report each year. The reason?… well there are a couple.

• Those looking for a mortgage who have a lower credit rating can find themselves paying a higher interest rate, or even denied access to certain types of loans.
• How about your career? More and more employers are checking the credit rating of short listed candidates (with your permission of course). If your rating is weak, it’s a big strike against your chances of being hired.

First off, you can have a peek at your credit report for free. Contact Equifax at www.equifax.ca or 1-800-465-7166 and Trans Union at www.transunion.ca or 1-800-663-9980. These free reports will not contain a credit score and it’s a good idea to get both reports. You can order more comprehensive reports including your credit score from these companies, for a fee.

The good news is that by taking a few basic precautions, prospective borrowers can protect their credit, and increase their access to better rates and a better choice of mortgage products.

Here are a number of steps that you can take to keep your credit rating healthy:

• Pay your debts on time – always meet due dates.
• Borrow only the amount you can afford to repay.
• Keep in mind that numerous inquiries for your credit report in a short period of time can worsen your score. A mortgage advisor will access your credit report and credit score just once before submitting any mortgage applications to lenders.

For those with credit issues, talk to a mortgage advisor, who can coach you on the ins and outs of improving your credit score over time – as your good credit history is established, in due course your borrowing options will increase.

If you wish to get a mortgage while you work on bettering your score, a mortgage advisor can also discuss how to get a mortgage despite weak credit.

How scores are calculated:

How Clients Can Improve Their Credit Score

1. Order a copy of the credit report, review it carefully and correct any significant errors.
2. Pay bills on time.
3. If there is a questionable credit history, they could open a few new accounts and use them responsibly, paying them off on time.
4. Avoid opening accounts without intention of using them. Having five or six of the same credit card type (e.g., Visa), is not favourable.
5. Having a credit card or instalment loan can help boost a credit score, as long as the balance is not too high.
6. Keep balance low in relation to available credit. If the credit limit is $10,000, keeping the balance below $2,500 (or 25 per cent of the limit) will improve the score. Balances of more than $7,500 (or 75 per cent of the limit) will decrease the score. Going over the limit has an even more negative effect.
7. Pay off credit card debt instead of moving it around to lower rate cards. Moving balances to other credit cards (i.e., “balance transfer”) and closing an old account can hurt the score.