So, you’ve been obsessively browsing real estate, and you’re ready to start seriously looking at houses for sale in person. You’ve been saving up for years, and stashed away a good chunk of money for down payment. Now, all you need is the bank to lend you funds to cover the gap.

The only problem? Your credit score. It’s low, and you’re not sure if the bank will give you a mortgage. You’re scared you’ll have to seek out non-traditional lenders, like wealthy individuals  for private financing, or trust companies, which will charge you a much higher interest rate -double or triple that of the banks and credit unions.

To get a prime lender to agree to give you a mortgage, you’re going to have to clean up your credit score – you will likely need a score over 600 to obtain a mortgage with traditional financial institutions at  a competitive interest rate.

But don’t fret if you’re score is below that – you’re score is recalculated every month, so you can rehabilitate it over time.

Here’s three ways how.

1 – Check it for mistakes

The two credit bureaus in Canada, TransUnion and Equifax, are not perfect and occasionally make mistakes. Before doing anything else, request a copy of your credit report from each institution (free once a year) and go through it to ensure accuracy.

2 – Get more credit

This may sound like the opposite of what you should be doing, but credit bureaus like to see how you handle the responsibility of borrowing and they’re unable to get a good picture of this if you only have a single credit card. A history of responsibly managing multiple and various types of credit is evidence that you can be trusted with additional loans. A mixture of credit cards, a line of credit (none of which are maxed out) and a car loan all paid on time is better for your score than maxing out one low-limit credit card.  But the key word here is “responsible.” Don’t take out more credit than you’re comfortable with just to try to increase your score. It will backfire big time if you can’t pay your debt on time and will end up sinking your score even further.

3 – Pay by the deadline

Paying your debt on time is probably the best thing you can do to move the needle on your credit score. Some Canadians erroneously assume that paying your credit card a few days late is no big deal, especially if you pay the entire balance at once. But it’s actually better to pay the minimum balance on time, than to pay the full balance late. If you have trouble with this, set up an automatic bill payment with your bank, or budget your income to prioritize your debt payments.

Essentially, cleaning up your credit score is about thinking like a lender, not a borrower. Ask yourself what would make a credit bureau consider you less risky and more trustworthy, and it will be hard to go wrong.

Zoocasa.com is a real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse homes across Canada including MLS listings in Toronto, Calgary, and Vancouver, on the website or the free iOS app.

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