You do everything you can to ensure your mortgage payments are made on time. So why is your credit score slowly getting worse? If you're like many Canadians, it's because your overall debt is climbing and you don't pay as much attention to those other loans.
According to a recent report from TransUnion, one of Canada's credit monitoring agencies, more Canadians are borrowing more money this year than in 2016 to finance their homes. The good news is that fewer home owners are behind on their mortgage payments. Making sure your mortgage payments are made in full and on time is always a good thing. But there is another side to the story.
Non-mortgage Debt on the Rise
On average, Canadians owe $1.67 for every dollar of household income. This debt often comes in the form of credit cards, car payments, and installment loans. We tend to see these loans as easier to walk away from because there are fewer immediate consequences to defaulting. However, with every missed payment or defaulted debt, your credit score takes a hit.
What's more, if you're only making the minimum payment on your loans you're accruing interest that will take you years to pay back. Credit card companies are required to show you how long it would take to pay off your current balance if you only make the minimum payment each month. If you're in the habit of just tossing your statement aside after looking at the amount due, take a closer look; you might be surprised!
Your Credit Score Still Matters
Even if you already have a home and a mortgage in place, your credit score still matters. When it's time for you to renew your mortgage, or if you need to refinance, you'll have fewer options with bad credit. Being responsible with your current mortgage payments is certainly an important factor that lenders consider. But your overall financial health also needs to be strong to qualify for the best products.
If you are in a situation where you're worried about your credit score, our team is experienced in dealing with bad or bruised credit. While the solution may not be straightforward, if there is a chance we will find it for you! Contact us today to set up an appointment: call Toll-Free 1-855-590-6520 or visit us at 307 Goldstream Avenue during regular business hours, Monday through Friday 8:30 a.m. – 5:00 p.m. We can also arrange an appointment evenings or weekends to work with you.
Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across Canada. The Auxilium team has over 100 years of combined financial experience and access to dozens of lenders to help you meet your goals.