What Is a Credit Score & How It Affects Your Life |Capital Mortgages

What Is a Credit Score

What Is a Credit Score & How It Affects Your Life

Your credit score is a type of number that lenders and lenders use to determine how likely you are to repay your debt. You may be wondering why this matters, but it can affect the way people think about you. A credit score is an important number that can impact the interest rate on loans, the ability to apply for new credit cards or loans, and even an apartment rental. Your credit score is determined by five factors: payment history, debt levels, length of credit history, types of credit in use, and new credit inquiries. FICO scores are considered the most accurate representation of your credit standing. Understanding your own FICO score will help you make smart financial decisions that will positively affect your life.

Why do lenders use credit scores?

Lenders use credit scores to determine how likely you are to repay your debt. Your credit score is an important number that can impact the interest rate on loans, the ability to apply for new credit cards or loans, and even an apartment rental. Lenders use five factors to calculate a FICO score:

  • payment history
  • debt levels
  • length of credit history
  • types of credit in use
  • and new credit inquiries.

How is a credit score calculated?

Your credit score is determined by five factors: payment history, debt levels, length of credit history, types of credit in use, and new credit inquiries. All these factors are reported to the three major credit bureaus every time you apply for a loan or open a new line of credit.

Your FICO score will be calculated based on your individual report from each bureau. The most important factor that contributes to your FICO score is your payment history. This could be rent payments, utility payments, or other things related to loan repayment. It’s not just about the amount you owe; it’s also about whether you pay what you owe on time. Your debt level is another factor that helps determine your FICO score.

Lower debt levels are better than higher debt levels as this can help show lenders that you’re able to repay what you borrow and save money for emergencies. Length of credit history accounts for how long you’ve been borrowing money and how long you’ve been managing those debts responsibly. If you have a longer track record of borrowing and repaying responsibly, this will affect your FICO scores positively. Types of credit account for all the different categories of loans or lines of credit that exist like mortgages or car loans. Lastly, new credit inquiries account for when someone checks your information before deciding if they want to give you a loan or extend more lines of credits to you.

What can my credit score be used for?

Your credit score can affect the way people think about you. For example, if your credit score is low, this may reflect negatively on your ability to repay debt. This has a number of effects:

  • You may be required to pay higher interest rates on loans
  • You may not be able to apply for new credit cards or loans
  • You may not be approved for an apartment rental

When is my credit score updated?

A FICO score is updated anytime there is a credit event, meaning when you apply for a new loan or credit card or if you take out a new line of credit. Some people worry that they won’t be able to improve their credit score if they don’t have any new credit in the past few months. But this isn’t true! Your current FICO scores are based on your total history so it doesn’t matter how much time has passed since your last credit event. As long as you maintain good habits, like paying bills on time and keeping debt low, your history will continue to positively impact your FICO scores.

What are the best ways to improve my credit score?

Although there are a few factors that contribute to your credit score, one of the most important is your payment history. You want to always pay your bills on time to show lenders you are capable of handling credit responsibly. Another way to improve your credit score is by making sure you don’t close old accounts, as this can negatively affect your length of credit history. You should also try and avoid opening any new lines of credit, as this can also negatively affect your length of credit history.


Your credit score is a number that is assigned to you by the three credit bureaus: Experian, Equifax and Transunion. This score is between 300 and 850, with 300 being the lowest possible score and 850 being the highest. The higher your score, the better your chances are of qualifying for a loan and the more likely you are to get a lower interest rate. The lower your score, the less likely you are to be approved for a loan, and the higher your interest rate will be.

Knowing that you’re responsible for your credit score and can improve it to make it better will help you take action. There are many ways to improve your credit score, and it won’t happen overnight. But with these tips, you can start improving your credit score today!

We here at Capital Mortgages look forward to assisting you with Ottawa mortgage needs and approvals. Contact us today by calling us at: 613-228-3888 or email us direct at: info@capitalmortgages.com

You can use these links to APPLY NOW or CONTACT US.

You can also click here.

What's The Difference Between Good Credit and Bad Credit? Capital Mortgages Ottawa

Good Credit and Bad Credit

What’s The Difference Between Good Credit and Bad Credit?

Credit is essential for almost every aspect of life these days. It’s a way to borrow money from lenders in order to buy a home, get a loan to start your own business, or even try and fix your credit. In order for you to have the best possible chance at getting loans, it’s important that you have good credit. Here are some of the differences between good credit and bad credit.

What is good credit?

Good credit is defined as having an excellent history of paying back debts on time. You may have good credit if you never had any late payments or missed payments.

With this type of credit, you are able to secure loans for larger amounts of money and can be approved for a mortgage loan. You’ll also be able to get lower interest rates and sometimes even a better interest rate than someone with bad credit.

The best way to get good credit is by keeping track of your monthly statements and following the rules in them. Your bank will typically send you a statement every month that shows your balance, payment history, and when your next statement will be sent out. To ensure that you have zero late payments in the future, it’s best to keep up with these statements as often as possible.

If you’re worried about not being able to pay off all the debt in your name, don’t worry! There are other ways that you can improve your credit so that lenders will trust you more. If you’re struggling with debt issues, consider speaking to a financial advisor. They offer free counseling services for those who need help managing their finances.

What is bad credit?

Bad credit is a term used by banks to indicate that you have a history of missed payments which would make lenders hesitant to lend you money. Bad credit can happen for a variety of reasons, some of which are outside your control. If you’re having trouble repairing your bad credit, there are certain steps you can take to help improve the situation.

Ways to Improve Your Credit

In order to improve your credit, it’s important that you do what you can within your control. Some things include paying off debt, making on-time payments, and using your credit wisely.

First things first: Get rid of any bad debts that are hanging over your head. If there’s something like a medical bill or an old car payment that you’re still trying to pay off, work on getting it resolved before starting anything else. Paying off debt will increase your chances of getting loans in the future because it shows lenders that you’re responsible with money and have the ability to handle them responsibly.

The difference between good and bad credit

So what is good credit? Good credit means that you have positive “hard” and “soft” information in your credit report.

Here are some of the different types of information in your credit report:

  • Credit score
  • Payment history
  • Credit inquiries
  • Debt-to-income ratio
  • Total revolving debt
  • Length of credit history

Soft information, like payment history, is a little more subjective than hard information, but it’s still an important part of your report. If you pay all your bills on time, then you’re likely to get better rates on loans. But if you’ve been late with a payment or had multiple late payments in the past six months, this will show up on your report as well. This information can also show up as negative soft info and could affect your credit score.

The differences between fair, excellent, and perfect credit

Credit is defined by the company that provides it, but generally speaking there are three different types: fair, excellent, and perfect.

Fair credit means you have a FICO score of less than 660. Excellent credit means you have a FICO score of more than 760. Perfect credit means you have a FICO score of 850 or higher.

There are some factors that will affect whether your credit is considered fair, excellent or perfect. The main difference between fair and excellent is how long you’ve been using credit–the longer the better. For example, using credit for six years would be considered excellent while using it for three years would be considered fair.

Some other factors that affect how good your credit is include:

  • Your payment history
  • Your SIN has been verified
  • Your income has been verified
  • Your employment history has been verified
  • Any liens on your property (mortgages) are clear and current
  • Any judgments on your behalf are clear and current

If you want to improve your chances at getting loans in the future, make sure that all of these factors have been completed properly before applying for any loans!

How to improve your credit.

While some people will be able to improve their credit by spending less and saving more, others may find that there are no feasible solutions. That said, there are still ways to improve your credit without going into debt.

Here are six tips for improving your credit score:

  • Pay your bills on time and in full
  • Keep the amount of debt you carry low
  • Never miss a payment
  • Don’t carry too many cards or open too many accounts
  • Close old accounts that you no longer need or use regularly
  • Pay down any high interest debt

We here at Capital Mortgages look forward to assisting you with Ottawa mortgage needs. Contact us today by calling us at: 613-228-3888 or email us direct at: info@capitalmortgages.com

You can use these links to APPLY NOW or CONTACT US.

You can also click here.

Capital Mortgages specializes as a service-oriented brokerage that prides itself on integrity and maintaining a service level second to none in the industry.

Why Do I Need a Mortgage Broker? 

If you are buying your first home, congratulations! This is an exciting milestone in your life, but it can also be a stressful one. Buying a home will likely be the most expensive purchase you will ever make and securing financing to make the transaction happen can be both overwhelming and confusing. Enlisting the services of a mortgage professional can help simplify this process for you and ease the burden of stress many people suffer with when dealing with complicated financial paperwork 


What is a Mortgage Broker? 

First things first, let us explain what a Mortgage Broker does. A Mortgage Broker is an independent, experienced and trained professional, who is licensed to represent a client and provide them with the most up-to-date financial advice based on their requirements. A Mortgage Broker’s primary role is to find and secure funding for their client’s mortgage financing.  


They can save you time 

While you could do all the legwork yourself, using a trained professional will save you time (not to mention a huge headache!) Because of the vast range of mortgage products available on the market today, shopping around can be a time-consuming process. Your Mortgage Broker has  the expertise and knowledge required to find the best rates, will complete the paperwork for you, and will negotiate with lenders on your behalf to secure you the most desirable rates and the best financing option for your needs. 


They can save you money 

Choosing the wrong mortgage could prove to be a costly mistake. Mortgage rates can vary day to day, and because of their knowledge and their daily contact with lenders, a Mortgage Broker will know which lender to approach first to attract the most favourable rate. Additionally, using the services of a Mortgage Broker normally incurs no cost for the client – they are paid a finder fee by the lending institution once the loan is approved and closed, so their assistance and expertise will often cost you nothing.  


They can help if your finances are less-than-perfect 

Do you have a low household income, or perhaps a less-than-perfect credit report? A Mortgage Broker can help put together a favourable application for financing and negotiate a better rate for you than if you approach the lender yourself. Your Mortgage Broker is trained to present your mortgage proposal where and how it will get the most immediate, positive result. 


Whether you decide to work with a Mortgage Broker or do the work yourself, it is very important that you are well-informed about your decision. For more information about the services we offer and we how we can help you secure the best mortgage solution for your needs, please contact us today.  


Renew your Mortgage with Ottawa Mortgage Broker: Capital Mortgages

These Numbers Are The Key To Understanding Your Finances

If you are interested in improving your financial well-being, it can be as easy as understanding some basic numbers. In fact, just a few sets of numbers are the key to understanding your finances today and in the future. Let’s take a closer look those numbers.

1. Net Worth

It’s simple to determine net worth. All you need to do is subtract debt from assets. For instance:


* Autos* Home* Home furnishings* Personal belongings* Savings account* Checking account* Investments (stocks, bonds, etc.)

Debts (Liabilities)

* Car loans* Home mortgage* Credit card debt* Student loans* Balance of any loans that remains unpaid

Once you discover net worth, it might be a negative number, and this is not good. To improve net worth you have two basic options:

* Increase assets* Lessen debts

2. Equity in the Home

Equity is one of the most important assets you can have. To determine equity, subtract the home’s current value (including appreciation and home improvements) from the mortgage balance. Here is an example. You owe $68,000 on a home and today it would sell for $145,000 (present market value). Subtract 68K from 145K and you get 77K. The home’s equity is an asset of $77,000. In some cases, you could have an “underwater mortgage” and this means you owe more than the property is worth.

To improve home equity, try these strategies:

* Upgrade the kitchen* Upgrade the bathrooms* Do your own improvement work to help increase greatly a home’s value.

3. Gross Earnings

If you receive a regular paycheck, gross income is the amount you’re paid before all payroll deductions. This is the number you must enter on your income tax forms each year. It is not the number to use when you make out a household budget. Instead, you will need to use another number.

4. Take Home Pay

This is also called net income and is the amount you end up with each payday. This is the amount you have to pay bills and all other expenses, and the figure you need for determining the household budget.

5. Monthly Expenses

Everything you must pay out each month is your total monthly expenses. It includes food, utilities, clothes, transportation, housing, and entertainment. This number is so important because you have direct control over personal spending, and it’s a good place to start when it comes to improving your financial picture.

6. Rate of Inflation

Inflation rates today have a huge effect on the future. You need to account for this number when you figure out a plan for the future and retirement. Remember, as inflation goes up, buying power goes down. The average inflation rate has been about three percent annually, but this can vary all the way from ten percent to almost zero.

When you plan for retirement, be sure to include an estimate of inflation over a period of years. Perhaps the best strategy is to overestimate, to ensure you’ll have enough for those golden years.



Why Young People Should Start Building Their Credit Profile

Having a good credit rating has always been important, but in current times it is more important than ever. This is why young people should start building their credit profile now. Young people want to have fun and live a worry free life, but building a good credit score now, and keeping it high will pay great dividends in the future. Let us look at some of the reasons young people, and all people for that matter, must have a high credit score.

The first reason is that you will be able to borrow money when you need it at a lower interest rate. In the past everyone paid basically the same interest rate no matter what their credit score. If you qualified for the loan, you paid the same interest rate as anyone else. Today, lending institutions charge higher interest rates to those with a low credit score. Having a high credit score will save you from paying a lot of money in interest. This is especially important when you make large purchases such as cars or homes. Since it takes time to build a good credit score you must start working on your score while you are young.

The next reason young people need to start building their credit profile now is work. This is something many people do not even think about. If you have a low credit score you could be passed over for a job or a promotion. Employers now take credit ratings into account when they hire an applicant or when they give promotions. Many people do not believe that this is necessarily fair, they believe that just because they have poor credit does not make them a poor employee. This could be true, but in the modern world it is a fact of getting a job that many employers use credit ratings in their decision making process.

Later in life, if you want to make large purchases such as sports cars, boats, or homes you must have a good credit score. For instance, to qualify for a home loan you must have a credit score of at least 600, as of today. With a score of 600 you will get the loan, but you will pay the highest interest. The same rule applies to purchasing anything with credit. For these reasons young people need to start building their credit profile as soon as they turn 18 and can have their own credit card.
Many people believe that building a good credit score is difficult. In actuality it is not hard at all, you just need to use some restraint and common sense when using credit. The easiest way to build your credit score fast is to get one credit card when you turn 18. Use the card for all of your daily living expenses, making sure you do not spend more than you make, then at the end of the month pay the full balance due. This way you are building your credit rating and yet not paying any interest. Check your credit score at least once a year, and if you use restraint, common sense, and your credit card you will see your credit score rising rapidly.


Buying a New Home: Capital Mortgages Ottawa

10 Tips on Fixing Bad Credit

Most of the people in Canada find themselves victims of bad credit where they are affected negatively. They
find themselves victims of the bad credit ratings for the reasons beyond their capabilities. Some may be ill; they
may have lost a job while others find themselves in this situation by not understanding the consumer credit.
When a bad financial situation happens to good people, bankruptcy sometimes is the only way out. That should not be
considered as the end of everything as there are some strategies that can assist you get your credit back on
track and you can be entitled again to mortgage even after bankruptcy. It will be very frustrating to move from
one financial institution to the other only to be declined. Here are the 10 strategies you should consider so as to
get your credit back:

1.Locate The Right Lender

There are some lenders who will not approve the mortgage the moment they will realize that a bad credit
appears in your credit report. This implies that you have to select the right lender who will decide whether to
approve or not based on your current financial position not the bankruptcy you had. Such lenders will approve
the moment they will realize that you are capable of paying back.

2.Consider The Length Of Time Since Your Bankruptcy Discharge

The different lenders have different criteria on this. Most of them will consider those with two years after
bankruptcy with a proof of being re established after the bad credit. There are some who can lend even those
with recent bankruptcy but you should seek advises from a mortgage expert like the team at Capital Mortgages so as to guide you on those types of

3.Consider Your Reasons For Being Bankrupt

If the reasons were beyond your control, then most of the lenders will approve the mortgage as it is not your
fault. If the reasons are as a result of poor management, excessive debts and many other reasons that can be
controlled, then it will affect the lender’s approval.

4.Consider The Size Of Your Down Payments

With your past bankruptcy, most of the lenders will consider at least 10% down payments including your own
funds that are not borrowed or given as gifts. In some cases, down payments of 5% or less may be allowed.

5.The Type Of Property

Some of the lenders will consider row townhouses or just houses. Very few lenders do consider apartments or
the stacked townhouses which may involve the stringent basis to qualify.

6.The Credit Report

This is meant to show your financial health based on your past behaviors. This will guide the lender on how
capable you are to repay. You can obtain a copy of your credit report from Trans Union (1-800-663-9980) or
Equifax (1-800-465-7166).

7.Your Credit Score

This is meant to reveal your credit worthiness. It is a summary that will translate your personal information from
the credit report and any other relevant sources into a 3 digit number that will represent the overall credit
worthiness. The borrower’s credit score will determine the rates of the mortgage. The higher the credit score,
the better the rates. Besides, there are those lenders who will set the minimum credit score requirements for
those borrowers with bankruptcy.

8.The Rate Considerations

Those borrowers with bankruptcy will have a higher rate than those with clean records. Besides a lender may
charge a lower rate if some basic lending criteria are met such as two years since bankruptcy, healthy beacon
score, a perfect debt servicing ratios and long term history of job stability.

9.The Re-establishment Credit

This is meant to inform the lender that you have been managing very well since bankruptcy. it will include the
payments of the recent on time loans on the banks if any. It is very important to know that any default will be
included in the credit report for the next six years and this could be the ground for the lenders to decline your

10.Seek Advice From A Licensed Mortgage Broker

A licensed Capital Mortgages agent will guide you on the basic steps to rebuild your credit score.  Our mortgage brokers will also give you the tips on how to get a mortgage even with recent bad credit.