Dear Cd's,
It's that time in our life, when living in your own place seems more satisfying than renting.
So, slowly and gingerly we have started dusting the free home buying brochures and guides(which previously were used for putting the chappathi flour on.. 
)
I was told that first step is to get a loan assured from the bank which in turn involves a good credit history.
so, all you seasoned home owners and experts please throw some light on my below 'innocently sounding silly questions'...
1) what is considered an acceptable Credit score to get an decent home loan between 200K-275k? can you please state your figure..
2) I used to stay in US before where i had accumlated a dozen credit cards(Thankfully, fully paid up). I use them as a backup for a rainy day. will this come into picture when my canadian credit history is pulled up?
I will greatly appreciate all your inputs in any way or form.
sincerely
seenappa
Location: Western Hemisphere
Posted on: 31-07-06 11:07:41
Quote:
Originally posted by seenappa
2) I used to stay in US before where i had accumlated a dozen credit cards(Thankfully, fully paid up). I use them as a backup for a rainy day. will this come into picture when my canadian credit history is pulled up?
I was once told by the "mortgage fairy" that every credit card account that is still open will be treated as an "open line of credit" and act against the so called credit history.
So, if you can, go ahead and close all the credit cards that you do not use and do not need.
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Dimple2001
Quote:
Originally posted by seenappa
Dear Cd's,
It's that time in our life, when living in your own place seems more satisfying than renting.
So, slowly and gingerly we have started dusting the free home buying brochures and guides(which previously were used for putting the chappathi flour on..
I was told that first step is to get a loan assured from the bank which in turn involves a good credit history.
so, all you seasoned home owners and experts please throw some light on my below 'innocently sounding silly questions'...
1) what is considered an acceptable Credit score to get an decent home loan between 200K-275k? can you please state your figure..
2) I used to stay in US before where i had accumlated a dozen credit cards(Thankfully, fully paid up). I use them as a backup for a rainy day. will this come into picture when my canadian credit history is pulled up?
I will greatly appreciate all your inputs in any way or form.
sincerely
seenappa
Credit Score plays a big part in getting good rates for mortgage. A person with a very good score will get the best discounted rate even if he/she is putting 5% down while on the other hand a person with a bad score may not get a good rate even if he/she puts 25% down payment.
However, every bank has its own policy regarding the 'acceptable' credit score which can range from 620 to 700 plus. Any thing below 600 will be considered not a good score and most of the 'A' lenders will not loan to a person below this mark. That being said, it does not mean that the person would not get a mortgage. There are other lenders who may consider other things such as net worth, true reason for impaired credit, job stability and income etc.
Every bank you go to apply for a mortgage, would first pull up your score and then decide to approve you and the rate it is going to offer. If this 'shop around' is done over a long period of time, then it may affect your credit score adversely. However, if all the 'shop around' for the mortgage is done with in 14 days time, then the score may not get affected.
The US credit history generally would not show when Canadian Credit is pulled. However, It might show up in very rare circumstances if some one has committed some fraud wherein an international bank is affected and they may report it to Canadian Bureaus as well. Some time the banks may decide to pull up a US bureau if the client has migrated to Canada from the US. I know a case wherein a client did not pay some money to HSBC in Dubai and it also did not show on his Canadian bureau but the CMHC had information of it and the client could not get the mortgage.
You should contact a mortgage professional and get your self pre approved who can offer you rates from over 30 lenders instead of going to every bank yourself which might affect your credit score.
Good Luck.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Pramod ji has very nicely replied the question.
Dimple2001 is very right about too many credit cards. 4 to 5 is optimal. More than that is more.
But a number of "mortgage fairies" have warned against sudden closing of a large number of credit cards. It will lead to sudden drop of credit score.
If you do have to close them, get them to report to credit bureau that "credit card closed on request of cardmember."
Location: Western Hemisphere
Posted on: 31-07-06 13:54:53
Quote:
Originally posted by LD
But a number of "mortgage fairies" have warned against sudden closing of a large number of credit cards. It will lead to sudden drop of credit score.
Well, my fairy's lawyer can deal with your fairy's lawyer to sort out the disagreement.
Anyway, LD, you are correct in stating that the closing of the credit cards must be clearly by you and voluntarily done and not due to some financial mess.
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Dimple2001
If the card closure is initiated by the card holder the issuing bank would generally report the closing of the card to the bureau as 'account closed by the consumer' and the bureau would record it as such.
Having too many cards could also have some adverse effect on the score and it is advisable to keep not more than 3 or 4 cards. Moreover, never draw over 35-40% of the limit of the card as it also affects the credit score.
If some one wants to cancel the extra unused credit cards, then he/she should try to keep the ones he/she is holding for a longer period of time and should cancel the relatively new cards or the ones he/she has possessed for a shorter period of time. The longer you have credit reported on your bureau the better it is and it also has a positive rating on the score.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Thanks everyone,
Pramod was very
descriptive and informed
. I am relieved to hear that 620-700 is considered a good score.
Dimple, I will heed the advice of your 'mortgage fairy' and get my old accounts closed V E R Y S L O W L Y so as not to rub LD's 'mortgage fairy'..err..the wrong way..
I would love to hear all your Credit scores and the level of difficulty in getting a 'loan'..
cheers,
seenappa
