In my industry, I have the opportunity to see clients from all sides of the financial spectrum. People with impeccable beacon scores, but also folks looking to get a mortgage with a slightly bruised credit score.
Most of the ones with affected credit score are asking me questions among these lines:
- Can I get a mortgage with a 560 credit score?
- Can you get a mortgage loan with a 530 credit score?
- How long does it take for a mortgage to hit your credit?
- How low is too low for getting a mortgage with bad credit?
But what many of you don’t know, is that before trying to improve bad credit, you should find out how it ended up bruised in the first place.
So the next natural question that usually comes up is “What impacts our credit record score”?
To name a few of the most common factors, there’s:
- consumer proposals
- credit utilization
- late payments
- number of inquiries
Knowing that many of you are interested in long term home loans or getting a mortgage with bad credit, I believe the information I’ll be sharing with you today will help you loads.
So let’s dig in.
Getting a Bruised Credit Mortgage
Many of my clients are curious to know how the factors listed above affect their credit.
So let’s analyze them one by one.
1. Consumer Proposals
Typically after an individual has reached a decision with its creditors regarding a mortgage or loan, a settlement will be agreed upon. Then, the individual will be provided an interest free payment structure. This payment structure is, in most cases, fixed. This means their interest rates will likely not increase during the entire lifetime of the loan.
The good news is that soon after the last payment is completed, and the discharge is finalized, the client’s credit will start to improve.
As many of you already know, I work with a selected group of alternative mortgage lenders in BC. I have b-lenders that will look at mortgage requests for clients 1 day out of consumer proposals. I also have (private lenders) that will support customers while still in their current consumer proposals.
So if you are looking to get a mortgage with bad credit and you are concerned over consumer proposals affecting your score, don’t worry. We have you covered!
2. Credit Utilization And Low Credit Scores
Wrong credit credit utilization happens to be one of the most unknown issues of bad credit. We are usually never informed about how this happens, but it is something we all ought to know. Especially when trying to get a mortgage with bruised credit.
So for example, if we have a credit card with a $1,000.00 balance and we are carrying a balance of more than 30%, our credit will more than likely be impacted.
I was amazed when I first found out this information. That’s because for most of my adult life I was under the assumption that if you covered a bit over the minimum payment, you were golden. Obviously, that’s not the case.
So as far as credit utilization goes, the less you use the better your beacon score is.
3. Late Payments
Late payments are quite an obvious reason your credit score could get low. If you want to get a mortgage or any other type of long term loan in the future, pay attention to how late payments can bruise and turn your credit into bad, in no time.
Are you constantly forgetting about your regular payments?
Here’s a trick. If you have monthly cell phone or utility payments, you have two easy options if you want to remember them. You can either associate a credit card for automatic payments or pay your bills online 3-5 business days before the due date.
I have had clients that had late payments only because they’ve paid their bill exactly on the due date and the bank transaction took a day to complete. Unbeknownst to them, the cell phone company added a late payment.
So check with your bank to determine the time it takes to process online payments. You need to be aware of this fact so that you can protect yourself.
4. Credit Score Affected By The Number Of Inquiries
Last but not least on our list of factors which can impact your credit, there’s the number of inquiries.
If you’re not quite sure how inquiries can affect our credit, shopping for a vehicle is a perfect example to use for this topic. If you’re trying to make a decision about what type of car to buy, your credit could be pulled by some different dealerships. And this can impact your beacon score.
Another example is about cell phone shopping. If you have been denied by a carrier and then go to several others looking for a contract, this too can impact your score. So if you worry that a carrier will say no, it’s better to ask them if they don’t have a deposit program. By doing this, you can save yourself from another negative inquiry impact.
As you can see from our post, preventing your credit from getting bruised is the best thing you could do if you want to get the best mortgage solution.
If you are curious to find out more about non traditional bank products, follow us and our blog. And if you have more enquiries regarding our private lenders’ long term loan solutions for buying a home with bad credit, we are standing by. Send us an email or give us a call.