Why You Must Manage Your Credit

You will constantly hear about credit from me because it is absolutely critical to the mortgage process.  Stop for a moment and consider the impact your behaviour in managing your credit has on a lender’s decision about your level of qualification.

For instance, if you pay your debts on time, you are viewed as a responsible, trustworthy and organized individual.  If you don’t, then you are viewed as an irresponsible, untrustworthy, and risky individual.  When a lender looks at your credit score, they are deciding which type of person they might be dealing with.  Can you guess which type is preferred? 

Another key is how often you seek credit.  All of your credit history appears on your credit bureau and are called credit inquiries.  Seeking a lot of credit is worrisome to a lender because too many cards and/or loans makes a person look out of control.

Similar to the above is the balance on a credit card.  At the end of the payment period, the balance should be below 80% of the limit.  If not, you are seen as high risk.

Therefore, try to:

1. Have only one or two credit cards

2. Keep card balances under 80% of the limit

3. Make all payments on time 

Always take managing your credit seriously – your credit score is the make or break point between getting a mortgage, or not.

Comments

[jennalee]

yes, managing credit is really a headache these days. I have 4 cards and don't how to manage them.
I think i should come back to 2 credit cards again.
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