As a Mortgage Broker for many, many years this is a question I get a lot. In an environment that consistently reports we as Canadians are way too far in debt compared to the income we make this question has it’s justification for sure. And the main reason is that lenders require we have debt to get debt, makes no sense right? I do agree to a degree so let me try to explain.
The general rule of thumb is lenders want to see you have a minimum of two creditor debts over a two year time frame. Add to that they want your credit card to have a limit that is not too low, let’s say in the $1,000 minimum range. Your credit rating, better known as Beacon Score, is directly related to how long you have had debt, how you pay that debt off monthly with no lates showing, and having low balances compared to your limits. New debt can lower your credit score as can balances on your cards too close to the limit. So, use your cards however only to about 50%-60% of the limit at any time. Seems counter productive doesn’t it, i do agree however that is the system we are in and if you want a mortgage you need to have debt, not too much mind you, but you need debt. Mortgage debt is good debt, bad credit can hurt your chances of getting a mortgage, renewal, refinance, home equity lines of credit, loan.
Call Brenda and Jessica at Advance Mortgage for all your mortgage, loans , purchases at 403-347-0774
