06 Sep How to build a healthy credit history
We keep coming back to this topic of credit. It’s a crucial aspect for anyone planning for homeownership. However, similar to most things in the financial side of life, you need to be careful when building your credit history. It is very easy to get into an outstanding consumer debt, but not as easy to fix it. In fact, many surveys about this topic indicate that Canadian are known for their high levels of consumer debt with more than half of those in debt having the majority of it on credit cards. This is to be avoided at all costs due to the fact that it will affect you when you decide to buy your first home.
Having said this, let’s look at what we can do to build a healthy credit history. The first to analyze your spending habits. Make sure you don’t overspend. The wisest thing to do is to establish a percentage you want to spend – not more than 20 to 30 percent of your credit limit. This should give you the discipline to do the same once you own a house.
Having multiple credit cards may be working against you. It really indicates you have a tendency to overspend which, in turn, can signal a difficulty in keeping up with payments. So, don’t go beyond three credit cards… and if you can live with just one, that’s even better. The same goes for lines of credit. If you don’t need one, don’t get one.
Bottom line, if you have good credit, you can have many advantages when asking for a mortgage. On the other hand, a poor credit may prevent you from getting a mortgage or you may get one with higher interest rates. Contact us if you have questions.