For most people, your personal credit score and how a credit score is calculated are complete mysteries. How can you be expected to play and be successful if you aren’t even told the rules of the game? There are things borrowers can do to improve their score so they can access better mortgage products and save thousands of dollars or qualify for their wonderful home when they otherwise might have trouble. Let’s stick handle through just some of the key things you should know about managing your credit score.
Amount owed and utilization accounts for 30% of your score. There are a lot of people that end up with high balances on their credits cards and struggle to meet the payments each month. If they manage to pay off their credit cards without seeing a mortgage broker to consolidate their debts, often the immediate response is to close the accounts. A better response is to cut up the cards and delete the numbers from your computer and devices and keep the accounts open. You want any remaining outstanding balances to be less than 75% of your total combined credit available, and if they are less than 35%, even better, because this keeps your utilization of available credit low and increases your credit score. Types of credit and the number of different credit products accounts for 10% of the score, so this is another reason you want to keep those accounts open. Cell phone providers are now reporting to the agencies that publish credit scores as well.
In some parts of the world where credit products are not well established, a borrower’s credit is evaluated based solely on how they have managed payments on their cell phone bills. It’s important to pay your cell phone bills on time; we’re all busy, so setup automatic payments to ensure a payment is not missed. My last word of advice for today is to monitor your credit score by purchasing your own credit report at equafax each year for about $25 so you know your score and to ensure the report is accurate. This will help you stay within the boundaries of the game.
There is a lot more to managing a credit score than we can get into in this short blog. If you would like to know more, contact your mortgage broker at www.peimortgageservices.com or Call (902 940 5927).
We can provide advice to help you manage your credit score and put you in a better position to qualify for a mortgage with better rates. Know the rules of the game, plan ahead for your home financing, and play SMART.
To get your credit score: Download our INVIS APP at Mopolo.ca
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www.peimortgageservices.com or Call (902 940 5927)
What to do if there is an error on your credit report?
If there are inaccuracies with your score you can contact Trans Union or Equifax using the forms below.
Domestic violence, intimate partner violence, and sexual violence leave
Effective November 1, 2019
Amendments to the Employment Standards Act will take effect to provide an employee up to three days (3) with pay - and up to an additional seven days (7) without pay for an employee to deal with the consequences of domestic violence, intimate partner violence, or sexual violence.
Application: An employee who has been employed for a continuous period of three months, or more, may access this type of leave. The employee may choose to take this leave intermittently or in one continuous period.
Regulations have been drafted which detail the purposes for which the leave may be taken. The regulations also provide details on the roles and responsibilities of employers and employees in using this leave. Regulations were published in the Royal Gazette, April 6, 2019 (page 74).
Sick Leave / Compassionate Care Leave / Parental - Adoption Leave
Effective December 29, 2018
Download Employment Standards Act - 11 30 2019
The recent federal budget included Housing Affordability Measures that may be applicable to your situation, now or in the future. There are three key measures intended to help: an incentive for first-time homebuyers, an increase in the amount of RRSP funds first-time buyers can access for a downpayment, and allowing divorced individuals to use their RRSP funds under the Home Buyers Plan. Let's take a closer look at each:
FIRST-TIME HOME BUYER INCENTIVE (available Fall 2019)
This new measure is basically a shared equity program designed to reduce mortgage payments for first-time buyers with the minimum downpayment. The Canada Mortgage and Housing Corporation (CMHC) will provide 5% of the cost of an existing home, or 10% of a new home in what amounts to an interest-free loan that isn't payable until you sell the property. The extra encouragement to purchase a newly built home is expected to boost home construction and help address a housing shortage in many areas.
There are a few caveats. If your household income is more than $120,000, you aren't eligible for the program. And your total borrowed amount (including the incentive portion) can't be more than four times your household income. With a 5% downpayment and a household income of $120,000, the maximum purchase price would be approximately $505,000.
The program is expected to be launched this Fall. We're still waiting for some details on how the incentive is paid back, and how increases or decreases in equity will be handled. Stay tuned! In the meantime, I can certainly run some numbers to determine if this is something you, or someone you know, may want to take advantage of later this year.
BOLSTERING THE HOME BUYERS' PLAN (available now)
The Home Buyers' Plan (HBP) allows first-time buyers to withdraw up to $25,000 ($50,000 per couple) from their RRSP to help with downpayment and closing costs, without having to pay tax on the withdrawal. HBP withdrawals are not added to a person's income when withdrawn, but instead must be repaid over a 15-year period. The budget proposes to increase the maximum withdrawal amount to $35,000 per qualified buyer, which is effective immediately.
DIVORCED INDIVIDUALS ELIGIBLE FOR HOME BUYERS' PLAN
The budget also proposed that those experiencing the breakdown of a marriage or common-law partnership can now participate in the Home Buyers' Plan. This measure will be available for withdrawals made after 2019, and is great news. After all, a financial plan that starts with homeownership can help both parties make the best possible start on a new path.
The bottom line on budget 2019? There are some good measures for some homebuyer groups that needed a boost. The new first-time buyer incentive program has certainly added another layer of complexity to the already complicated mortgage world that includes two different stress tests. Getting expert advice throughout your mortgage years is more important than ever. Got a homebuying dream? Feel free to get in touch for a review of your situation at any time!
For more info on mortgages or changes call PEI Mortgage Services at 902 940 5927.
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