Poor Credit History?
Were you foolish with your money when you were younger, went through a messy divorce, had a small business failure, or maybe you lost your job? Whatever the reason you have a bad credit history and your bank won’t give you a mortgage. Sound familiar?
Even if you were just discharged from a bankruptcy, there are still options available to you. What are your options?
At Best Mortgages Vancouver we’ve helped many clients with poor credit history obtain a mortgage. If you would like to speak to a specialist call 604-961-2400 or click here to have one of our mortgage specialists contact you.
There are several lenders who specialize in this sort of lending but you won’t find them on every street corner. There are private lenders, trust companies and even some banks that will take a good look at your situation and will approve your application if the deal makes sense.
Your interest rate may be a little higher than someone with perfect credit. How much higher will be dependant on each individual’s situation. You may also need a higher down payment, again dependant on each individual’s situation. Let Best Mortgages Vancouver help you reach your dream of home ownership.
Now if the sound of higher interest rates or having to come up with a larger down payment doesn’t sound appealing we can help you take the necessary steps to improve your credit and get you on the road to establishing a good credit score that will allow you to qualify to purchase a home with as little as 5% down at the best interest rates. Best Mortgages Vancouver can help you.
Improving your credit may not be easy but the benefits are well worth it. Your overall credit history is important, but mortgage lenders are particularly concerned with your more recent record. A full year’s worth of reduced debt and timely payments can make all the difference in being able to get a mortgage. If you start today, it’s possible that you can improve your credit enough to buy a home relatively soon.
Consider the following suggestions:
- Get the facts. Don’t rely on your memory about which bills you’ve paid and when – lenders won’t. They’ll obtain a complete report of your credit and loan payments over the last several years. In Canada there are two main credit reporting agencies. It is best that you check to make sure all outstanding issues have been resolved. You can contact them as follows:
- You can obtain a free copy of your credit report simply by contacting Equifax National Customer Care Centre at 1-800-465-7166 or Trans Union at 1-866-525-0265. Both these companies also offer on-line services that allow you to purchase a copy of your credit report starting from $14.50 for Equifax and $14.95 for Trans Union.
- Fix it. Credit reports aren’t always accurate, so review yours carefully. If you spot any errors, write a letter explaining what should be corrected and why. Include any relevant backup material to support your claim, such as a receipt from a former creditor showing that you’ve paid a debt. Send the materials to each credit bureau by certified mail with a return receipt.
- Keep a copy of all such correspondence! Be persistent but polite in following up to make sure the corrections are made. You can also send letters that add explanatory information to your credit file – for example, your success at meeting a reduced payment schedule.
- Negotiate. Many creditors will consider revising the terms of your debt or even accepting a portion of the full amount. Write a letter (and keep a copy) explaining your situation and offering a partial payment – perhaps 40% of the amount you owe – or an extended payment schedule. Make sure you receive a written response and send the information to the credit bureaus. If a creditor accepts a partial payment, make the payment, get documentation and send it to the credit bureaus. If you receive a reduced payment schedule, be sure to pay in full and on time until the debt is paid off, then notify the credit bureaus.
- Stop using credit cards! If you want to buy a home, you need to reduce your debt. That’s hard to do when you’re adding to it every week with new purchases. Take your credit cards out of your wallet and put them in a ziplock bag. Fill a plastic cup water and place the cards and ziplock bag into the cup. Add the cup to your freezer. Every time you’re tempted to buy something on credit, ask yourself whether having that item is more important than buying a home. If it is an emergency you can thaw the cup under hot water.
- Do better – starting NOW. You must begin paying your bills on time, which means making at least the minimum payment by the requested date. Gather all your bills, add up the minimums and commit to paying them. If you truly can’t, seek advice from a credit counseling service. In B.C. you can contact the Credit Councilling Society of B.C. at http://www.nomoredebts.org/
- Find More Money. For the next three weeks, record every penny you spend and what you spend it on. Then take a hard look at where your cash is going. You might be surprised at how much relatively “easy money” you find. The $5.00 you spend on premium coffee every weekday adds up to more than $100 a month. Would a thermos from home do the job? How about bringing your lunch to work most days instead of buying it? Making a few choices along these lines can help you discover hundreds of “extra” dollars a month that can make credit card balances disappear much more quickly.
If you’ve been through a bankruptcy or simply don’t have any current credit cards or lines of credit you will need to begin rebuilding your credit. Applying for a credit card is the easiest and the quickest way to improve credit history. Initially, you may have to obtain a secured credit card. However, once your credit rating improves, you will begin to receive offers for unsecured credit cards. Ideally, you should open at least three new credit accounts. Maintain low balances. Avoid late payments. If possible, try and pay off balances each month.
A secured credit card is a product where the security deposit you provide is equal to the credit limit of your credit card. Your deposit will be held in an interest bearing account with interest and paid to you annually on the anniversary of the opening of the security deposit account.
You are required to make regular payments to your account over and above the security deposit amount because this isn’t the same as a “pre-paid” card – it is a regular credit card.
Your security deposit is held for as long as you maintain your account. If you decide to cancel it, your deposit will be returned to you with interest, after all outstanding purchases have cleared and the balance owing is paid in full.
Two companies in Canada offering a secured credit card are Home Trust and Horizons.