When it comes to buying a home, credit history becomes especially important. As an essential part of securing a mortgage, having good credit signals to lenders that you’re capable of managing and repaying debt. If you’re looking at beginning your home-buying journey in the near future, it’s worth looking at your current credit score and if possible, taking steps to improve it.

Even if you earn a healthy income, you’ll want to ensure you’re working towards improving or at least maintaining your credit score before you start looking for a home. At the end of the day, the more qualified you appear to banks, the better mortgage you’ll be able to secure. This will not only make the buying process easier and quicker, but it can also help you avoid possible disappointments.

As a local real estate team, we’ve helped hundreds of buyers find their dream homes in Toronto West and beyond. With the buying process down to a science, we can help you optimize your credit before you enter the market.

What You Need To Know

When deciding how much money to lend to you, banks focus heavily on three things to determine your credit worthiness:

• Credit History
• Income/Expenses
• Down Payment

Whether you have great credit or bad credit there is always room for improvement. Having bad credit doesn’t necessarily mean you cannot buy, however, having a good credit score makes the buying process much simpler.

Read on to discover 7 easy methods you can use to optimize your credit score.

1. Pay All Bills On Time

Payment history accounts for a significant portion of your credit score. It seems obvious, but even missing just one payment can affect your credit. If you can’t pay a bill in full, at least ensure you pay the minimum amount due. This can help you maintain your current credit score, even when you don’t have the space to improve it at the moment.

If you’re a forgetful person, set a reminder on your calendar, phone, or computer to help you make payments on time.

2. Watch Your Credit Balances

Even if you have a high limit on your credit card, it’s helpful to limit how much of your available you use. Believe it or not, you can still damage your credit score without going over your limit.

This applies to both credit cards and lines of credit. Ideally, maintaining a healthy credit balance means never using more than 50% of your available credit. This is easier said than done, however, it’s a helpful target to aim for. You may also be able to ask your bank for a credit limit increase, which can make it easier to manage the balance.

3. Be Careful About Opening New Credit Accounts

Having many credit checks and new applications for more credit doesn’t reflect positively on your overall credit history in the eyes of creditors.

4. Update Your Creditors If You Move

This is one extra step to ensure you never miss a payment. Ensuring your address is up-to-date with all your creditors eliminates the possibility of error due to not receiving your bills at the right address.

Pro-tip: Opt for online billing when you can so keeping track of your bills is as simple as possible, and you won’t be affected by missed mail if you move.

5. Monitor Your Online Accounts

One of the simplest ways to ensure you’re up-to-date on payments is by monitoring your online accounts. New digital tools such as online banking have changed the way many Torontonians manage their finances. While many people still trust and rely on classic paper bills, there is some margin for delays or errors that comes with traditional postage. While it may not happen often, important bills or statements can get lost in the mail.

To mitigate this risk, check your online credit or banking accounts regularly. That way you’ll never miss a payment by mistake.

6. Pay Off Overdue Bills

If you have some accounts that are late, bring them up to date as soon as possible. Once they are paid in full, your credit immediately starts repairing.

7. Look For Inaccuracies

Sometimes, information reported to the credit bureaus isn’t quite right, is incomplete, or outright incorrect. The agencies make it easy for you to dispute these inaccuracies. And remember, credit bureaus are just the messengers, it’s up to you to let them know of any reported inaccurate information.

Pro-tip: Avoid checking your credit too often, because frequent credit checks (even by you) can decrease your credit score.

Have more questions about credit or buying a home? We can help! Fill out the form to reach our team and speak with one of our experts. Or click here to call us.