Steps to Getting a Good Credit Score?
For most of those born in Canada, the credit history generally starts in their late teens with their first student credit card, first cell phone or a first car. Unfortunately, at that age, most don’t realize the importance of making timely payments. What is a difference. What are the steps to getting a good credit score? Having established good credit history and good credit score that early in life opens doors to a greater chance of wealth and prosperity. I have met a few younger real estate investors over the last few years that had taken care of their credit history and credit score and by their early 20’s had owned multiple rental properties and real estate investments. How many twenty-something year olds can say they are worth over a million dollars by starting from nothing. To find out how to do this visit my page “How to make money in real estate” for young people“.
Once you have established your first loan or a credit card, one of the most important steps in getting a good credit score, aside from making timely payments, is to make sure that you carry low balances. Although you may be using the available credit for purchases, it is ABSOLUTELY important to try and keep your balance below 30% of the total available credit. Lenders do not like high balances because it makes it appear that you can not afford to pay off your debt every month and it then makes them nervous to lend you more money.
Car or Loans. A major disadvantage in credit terms is getting a loan for purchases or a car loan. It may seem as a good move at first because clearly it shows that another lender saw you as a credit worthy consumer. However the moment you get the keys in your hands and drive off with that new car that you bought, you now have a loan that is 100% utilized vs the important “under 30%” rule. It can now take a few years before you get to that level where that will not be detrimental to you credit score. What is the alternative? Try and buy with as little down payment as you can get approved for, and assuming that you have an open loan, as soon as you get the car, drive back to the bank and use the remainder of your downpayment and pay it towards the loan. You will now have 100% minus the down payment, on your credit score which gets you there faster.
Better yet; Lease a car or any equipment you can and on a longer term so your monthly payments are lower as well, thus freeing up some room for future borowing.
Better better yet; Buy with an interest only loan if you can.
Better better better yet; Buy with an interest free loan.
I can show you countless steps to getting a good credit score but ultimately, all you have to remember is to keep your balances low and make payments on time no matter what. In fact taking any steps to getting a good credit score will reflect on your borrowing ability and ultimately in your ability to buy real estate.
Want to know how to do the 3 above? All my real estate clients who buy and sell with me know how. Become my real estate client today! Contact me at 647-892-5007 or email me here.
For more information on credit scores and steps to getting a good credit score visit CMHC website