Credit and mortgages
An important part of applying for mortgage financing is a credit check. For some, this is an unknown but in our experience it is straightforward if you have been responsible with credit in the past.
Things you should know beforehand
Just like Mom always said, honesty is the best policy, and that certainly holds true when applying for a mortgage. If you think you may have issues with your credit, tell your lender up front so she can help you. Everyone wants to see your financing application approved, if possible.
You may consider getting a copy of your credit report before you apply in order to avoid surprises and possible delays. Because your report contains information about you, you have the right to inspect a copy of it. Equifax, one of Canada’s largest credit bureaus, will mail you a free copy upon request but you can obtain it online for a small fee.
Information that is included
As a routine part of the application process, your lender will order a copy of your personal credit history. This information is compiled by credit reporting agencies, and comes from various sources, including banks, retailers and other public records. The data collected may come from past and current credit or debit cards, financial institution accounts, personal loans, mortgages, student loans, and more. Your lender will receive a report that shows the creditor’s name, your account number and the date you opened it, as well as your current balance, and a detailed payment history (for example, how many times you were late paying bills). It can also show public records information like marriages, divorces, liens, any criminal history, or bankruptcies. Generally, credit reports go back seven years.
How your credit report is assessed
The credit reporting agency does not rate you, it merely provides information on your credit history. Your lender will assess the report and determine whether or not to lend you money. If they have any concerns, you may be asked for more details. Generally, lenders work as quickly as possible when processing mortgage applications, but may be slowed down if they need to check in with you again for an explanation concerning items on your credit history. There’s no need to worry if this happens, just be prepared to answer all of the questions you’re asked—often a simple explanation will clear it up.
Other information used
Your lender will also use the report to verify other information on your mortgage application such as information about your employment status, your address and possibly rental payment history. The credit report will also indicate inquiries made by other creditors over the period of the report. This information shows your lender other avenues of financing you may have tried. Be prepared to answer all questions thoroughly and honestly.
Dispute errors in your credit report
If you disagree with something in your credit history, you have the right to challenge it and ask that the information be corrected. For example, if your report shows you were over 90 days late paying a bill, but doesn’t clarify that you withheld payment pending the settlement of a dispute with the creditor than you should ask for a note to be attached to that line item. If you’d like to dispute an issue on your credit report, contact the credit bureau directly.
To Do List
Correct any errors and submit reasons for delayed payments like disputes
Lenders will see your credit report including notes for the past seven years
Contact us for a referral to a mortgage broker if you would like to make an application or learn how to repair your credit