What is Credit?
Each person in Canada has a credit score and a credit history. Credit scores range from 0(meaning there is not enough credit history to make a report) to 850, which is considered perfect credit. Credit scores are designed to inform lenders how much of a risk it would be to lend to you. Someone with a high credit score is more likely to pay off any debts they have quite easily. Lenders will happily lend to someone with a credit score above 750 and well into the 800s. Poor credit is seen as a risk to lenders, and no credit is even more of a risk.
What Makes a Bad Credit History?
You may be confused looking at your credit score. Why is it so low? What is making my credit history so bad? There are a few key places to turn for answers. If you owe too much money, you are seen as a risk to lenders and it will lower your credit score. When was the last time you paid your phone or credit card bill on time? These late payments are also hurting your credit score.
How Bad Credit History Affects Your Mortgage Options
Your poor credit score could be affecting your ability to buy a home and here’s why.
Because you are seen as a more risky borrower, you might have difficulty obtaining a mortgage directly from lenders.
You may need to pay higher interest rates than other borrowers for the same exact mortgage rate.
You can improve your chances of being approved by picking up mortgage insurance. This type of insurance can help cover your monthly mortgage payments in the event you cannot. Just because you have bad credit doesn’t completely eliminate your chances of obtaining a mortgage. There are merely a few extra steps and considerations you have to make.
What to do About Mortgages When You Have Bad Credit
When you have a bad credit, or a rocky credit history, and need a mortgage, it will be more challenging to find a lender that is willing to loan to you. Luckily, you can make this process a lot easier by using a mortgage broker. Certain brokers like Morgix specialize in finding their clients the right mortgages despite having bad credit. These specialized bad credit mortgage brokers have extensive knowledge when it comes to maximizing your mortgage value despite the bad credit. Morgix works in tandem with a debt settlement lawyer who can actually reduce the amount of debt you need to consolidate and repay.
Have bad credit? Contact the Morgix team and let our agents secure you the funds and rates you need and deserve! You can get pre-approved the same day and receive your funds the very same week.