Buying an apartment or renting a house is one of the most important financial decisions affecting the quality of your life. You are going to live in that place and make memories with your family in that abode. However there are certain factors that affect the decision to buy or rent the house, your credit score is of utmost importance of all the factors.
The topmost realtor of GTA from HomeLife, Pranav Puri, says credit score determines your potential to own a credit card and pay your expenses and bills. You ought to have a good credit score to be able to avail lot of facilities like buying or renting the house of your dreams. There are some activities which push up the credit score and make it favorable. However some acts, knowingly or unknowingly dent the credit score adversely. Pranav suggests these must be avoided under all circumstances.
5 Things that Ruin the Credit Score
Renting or owning a house in GTA, Canada or even places like USA, Austin or just anywhere in the world, depends on your credit score. A good real estate agent will guide you on how you can improve the credit ratings so that buying a house can be facilitated.
The most reliable realtor of GTA, Pranav, shortlists some of the major fallacies which mar the credit score and affect the ability to buy the house:
- Using the Credit Card too much
Exorbitant use of the credit card for all purposes and for daily needs and in full each month can be a devastating decision for the credit score. Maxing out the card each time will ruin the credit score. Fully utilizing all the credit limits gives a negative connotation to the credit utilization ratio. A high credit ratio means you are spending up to the brim of the limit and this dents the credit score badly.
To buy a house in GTA or rent a property, keep your credit score high by maintaining a low credit utilization ratio.
- Using the Credit Card lesser than Needed
Credit score is ruined if you are unable to build a credit history. This implies that you haven’t been using the balances and payments using the credit card judiciously. Inactive credit accounts will create trouble while renting a house. Pranav says maintain your credit score wisely by using the credit card and you can rent a house. You may deck up your house by adding color to the rental.
Not using a credit card altogether can be a big financial error.
- Unhealthy Payment History
Making your payment each month well in time is the mantra for good credit score. The payment history amounts to 35% of the credit score. Issues like bankruptcy, tax liens, charge-offs and collections negatively affect the credit score. Pranav says you will be in a better position to target the house that suits your requirements if you make your payments timely.
Also unpaid bills from various sources drop the credit score tremendously. For buying your dream home or renting a house, make sure all the outstanding bills are cleared timely.
- Overall Level of Debt
When you analyze a real investment opportunity for personal or commercial purpose, it is of utmost importance to calculate your credit score first. The level of debt comprises almost 30% of the credit score. Pranav Puri says if the overall level of the debt is high or if there is too much balance, the credit score goes down. As your balances are paid down, you can improve your credit score.
Before buying or renting a house, you must study the amount of overall debt, credit utilization and the ratio of loan paid to overall loan amount.
- Too Many Credit Inquiries
A credit based application calls for an inquiry and credit check. 10% of the credit score or ratings are determined by the number of the inquiries placed on your credit card. Many inquiries within a short span of time can hurt the credit score and affect your house purchasing or renting capacity.
Before calculating hidden costs in buying a house, the onus should be on maintaining a good credit score to leverage your ability to buy or rent the house.
For any queries or suggestions in buying or selling a house in GTA, contact the best realtor in Ontario, Pranav Puri from HomeLife. You need to keep your credit score high to be able to show that you can manage your rents and mortgages without hassles.