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.

Conclusion

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.

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How to Eliminate Credit Card Debt: Capital Mortgages

Eliminate Credit Card Debt

The Definitive Guide on How to Eliminate Credit Card Debt

One of the most difficult things in your life can be paying off your credit cards. Whether it’s because there are multiple credit cards, the balances on each card are high, or you just don’t have any extra money, if you want to get out of debt, you’ll need a plan.

The best way to build a plan for paying off your debt is to create a budget that includes all of your expenses. This will help you see where your money is going and what you can cut back on. You can also try making more money by working overtime, getting a second job, or investing in other income generating opportunities. If you’re willing to take on more debt as well as make some lifestyle changes, then there are plenty of ways to pay off those credit cards without relying on willpower alone.

How to eliminate credit card debt

You can start by paying off the credit cards with the lowest balances. It’s important to pay these off in full and on time every month so you don’t add any more interest or fees to what you owe. After that, you can work your way up to the credit cards with higher balances. Last, but not least, it will be important to use a budgeting system for any future purchases. That way, you know how much money you have left in your monthly budget for spending and how much debt needs to be paid off next month.

How to make more money

While this might seem like a no-brainer, making more money is another way to eliminate debt. If you want to make more money, you can try finding a second job. If that’s not an option, then you can try investing in other income generating opportunities. These are great ways to pay off your credit cards without relying on willpower alone.

Budgeting and making a plan for your expenses

If you’ve never created a budget or you’ve let your credit card debt go until now, this first step can seem daunting. But it doesn’t have to be. You might think that your money isn’t going anywhere because you aren’t spending any of it, but many people find they have money going to things they didn’t even know they were paying for.

For example, did you know that your cable bill is also a source of extra expenses? Not only are you paying for the service itself, but there are always hidden fees that make the cost of cable higher than what is advertised on TV. And don’t forget about the internet and cell phone fees! These monthly expenses can sap away at the little bit of discretionary income that most people have each month.

The best way to start saving money is by looking at what you’re budgeting for first. Then create a plan for how much additional debt you want to take on in order to pay off your credit cards faster. Your plan will include budgeting for all your regular expenses as well as anything else that may come up in the future (like new clothes). Keep in mind that if you want to successfully pay off your credit card debt quickly and without too much hassle, then there’s no point in waiting around–you need to make a plan today!

Cutting back on your expenses

One of the best ways to pay off your debt is by cutting back on your expenses. This may sound like a no-brainer, but it’s often easier said than done. If you take a look at your budget, you can see what areas need to be cut back on. For example, if you have a lot of money going towards cable and eating out, then you may want to rethink those budgets and find more inexpensive alternatives. By trimming down in these areas, you will have more money for the credit card payments that meet the minimum payments.

Using a credit card counseling service

One of the most popular ways to pay off credit card debt is by using a credit card counseling service. These services are designed to help people get out of debt and they come in many different packages. Generally, they will have you make monthly payments that are paid directly to them and then one day, all of your debt will be gone. If you’re serious about getting out of debt, then this option could be the best for you. But just remember that it’s always better to change your habits so you can avoid taking on more debt later in life.

Conclusion

If you have credit card debt, it’s time to take action. The best way to get out of debt is to come up with a detailed plan to help you save money and pay off your debt. It’s never too late to get started. If you need help with your plan, talk with a reputable credit card counseling service for personalized advice designed to help you get back on your financial feet.

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.

Renew your Mortgage with Ottawa Mortgage Broker: Capital Mortgages

3 Steps to Take Before Applying for a Mortgage

Do you think it’s time to contact your local mortgage broker for a new home purchase or a refinance on your current home? Here are three things to consider before filling out the loan application.

1. How is your credit?

Your credit score will impact your ability to get a loan more than anything else. The higher your score, the better interest rate and terms you can get on the loan. The best thing to do is to view your credit report from the three credit reporting agencies, Transunion, Equifax, and Experian. You can do this once a year for no charge. Once you have the reports, you should look them over carefully to make sure all the information is correct. Once you’ve verified that everything is accurate, you will then need to look at your overall score. If your scores are anywhere above 580, you should be able to get a loan. Ideally, you want to be above 700, but there are programs that work with credit scores lower than that.

2. Pay down your debt as low as possible

There are two main reasons to focus on paying off your debt before applying for a new loan.

If you have any bad debt or are behind on any payments, your credit score will be lower. If you can pay off debts that show up on your credit report, you will see your score go up. Also, if you have a high debt to credit ratio, your credit score will be lower as well. A high debt to credit ratio means that you have used up most of your available credit limit. For example, let’s say you have a credit card with a $5,000 limit and you owe $4,500 on it. You will show up as a higher credit risk because you’ve almost tapped out your limit. On the other hand, if you only owe $500 on the card you will show up as a lower risk, and your score will be higher.

The other reason to pay off debts is that it will increase how much you can borrow on your home loan. Your mortgage broker will look at your debt to income ratio which is how much you owe on debt every month in comparison to your income every month. The more cash flow you have in your budget, the higher your mortgage payment can be. The higher the mortgage payment, the nicer house you will be able to afford.

3. Fix up your home

If you are not looking to buy a new home but only wanting to refinance your current home you not only need to do the first two items on this list, you also need to make sure your house is spruced up and looking nice. The refinance is based on a home appraiser giving value to your home. The more repairs that are needed, the lower the value the appraiser will give your home. You want the home to appraise as high as possible to get the best loan options. If you have at least 20% equity in your home, you will have the best rates, and you won’t have to pay extra mortgage insurance.
Your mortgage is usually your largest monthly expense, taking these steps will help ensure that you get the best deal possible with the lowest out of pocket expenses. If you are unsure, feel free to give Capital Mortgages a call, and one of our Mortgage Professionals will be happy to answer any of your questions.