Credit Ratings
Lenders check a borrower's credit history, as shown on a Credit Report, as the most accurate indicator of a borrower's ability and willingness to repay debt obligations.
A Credit Score is an indicator of how likely a borrower is to repay their loan at the agreed upon terms. Credit scores range from 300 to 900, with 900 being the highest score. Generally speaking, the higher the credit score, the more likely it is that a borrower will pay back a loan and the lower the risk to the lender. Equifax and Trans Union are the two primary consumer credit reporting agencies in Canada.
LESS THAN PERFECT CREDIT
Even with less than perfect credit you may still qualify for a mortgage loan based on other factors such as income, down payment, the property, etc. Some lenders take this into consideration along with the reason that the credit has been damaged or bruised. Just keep in mind that damaged or bruised credit does make you a higher risk, and this may result in higher interest rates and fees.
Some issues that may affect credit:
- Previous bankruptcy
- Consumer proposal
- Late payments
- Liens
- Judgements
- Outstanding property taxes
- Outstanding personal taxes
There are many other options that you can choose from when selecting a mortgage, from the term of the mortgage (this is the length of time that the agreed-upon mortgage contract conditions, including interest rate, will be fixed. It can vary from six months to 10 years) to the amortization period (the length of time you have to repay the entire loan).