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For a Waterloo Region home-buyer, applying for a mortgage with the best possible credit score is a must, not only to actually qualify for one, but also for getting the best possible terms and interest rates.
Many people do keep a careful eye on things like credit card and loan payments in order to maintain a good credit profile, especially when they are planning to buy KW real estate, but there are other things that can have an impact on it that people are less aware of and more likely to overlook. Here are five of the biggies:
Little Private Debts
Credit card companies and loan issuers are not the only ones who report to credit bureaus when a debt is paid late or goes delinquent. Parking fines, gym dues, even library fines have all been known to show up as negatives on credit reports and affect a credit score so keep an eye on small debts as well as the bigger ones, as negative entries like this can have quite an impact.
A utility bill is not a loan and utility companies will not report a good payment record to the credit bureaus. Somewhat unfairly though, they will report delinquent accounts and will actually do so far more speedily than many other institutions, potentially putting a big dent in your credit score.
Business Credit Cards
Individuals who own a business and hold credit cards issued in the name of the business rather than their own do not always realize that as the principal they will still be held personally liable for the activity on such cards by the credit bureaus. Therefore, such things need to be watched as carefully as personal credit card accounts are.
Many consumers are now savvy enough to request that annual free copy of their credit reports but they do not always examine quite as closely as they should. For example, if yours is a fairly common last name it is not unusual to find that your credit report actually contains information that belongs on someone else’s report.
It is worth remembering that the credit bureaus do not verify the reporting information they receive for accuracy as a matter of course, they simply add it to the account that they are told to. They have no way of knowing that you are not the Fred Bloggs who owes a big back credit card bill. No way that is unless you tell them.
Mistakes on credit reports are far from unusual as well. For example, if you paid off a loan and the creditor did not report that fact (which happens, especially with smaller loan companies like a local car dealer, for example, the credit bureaus have no way of knowing that, so would still show it as a debt, possibly even a bad one.
There is an easy remedy to these credit mistake woes though. Formally challenging an entry on your credit report obliges the credit bureau to investigate the debt, giving you the chance to clear your good name! All you need to do is send a letter – along with evidence to back up your claims – and the matter must be settled, one way or another, by law, in 30 days.