Credit - Why You Can't Buy a Home without It
The word "credit" sounds very offensive in today's economy. It is believed that the major reason of slump in the world economy and especially in Canada's economy in past few months is too much usage of reason. Using credit excessively and improperly is not appropriate; however using credit is not bad either. Here we will discuss the use of credit in case of purchasing a real estate.
It is necessary for you to possess a credit record if you are planning to buy real estate in Canada or any other place in North America. It is impossible to buy a house through mortgage loan unless you have a valid credit record. Besides an authentic credit report, the detailed description of the credit that you are using also determines your ability to buy a real estate.
Your credit report can effect when you are applying for a mortgage loan in Canada. Many mortgage lenders will refuse to give you a mortgage if your credit lines are not enough. Most loan lenders in Canada just want to make sure that you will manage to repay their loan on time. In most cases, holding three accounts is enough for large credit lines. By not holding sufficient credit, you are considered non eligible applicant for the mortgage loan and mortgage lenders will be doubtful about your repayment of the loan.
When the loan lender is satisfied with your credit history, then only it will think that you suitable for the loan. The loan lender in Canada not only scrutinizes you credit record but also focus on how regular have you managed your credit lines that are extended by other loan providers. They check that you have particle_ID debtors regularly and on time and also your debit-to-credit ratio, that is what amount of the extended credit is used by you. If you have number of unused credit lines will decrease your debit-to-credit ratio and if you have used most of the credit that is extended to you then it will result in high debit- to credit ratio. Generally, the lenders are only concerned about the regularity of the debts payment.
It is important for you to improve your credit profile to determine the type of mortgage rate you qualify for. You can either get rewarded or penalized by mortgage lender, depending on how you have maintained your credit profile. It will be easier to get mortgage with low interest rate on well managed credit as compared to poorly maintained credits. The loan lender will offer the mortgage loan on badly maintained credits too, but at high mortgage rate. The mortgage rate of interest makes a lot of difference in loan payment.
This is very clear that the credit plays an important role not only in establishing you eligibility for obtaining the loan but also to determine whether you can afford the loan. You can improve your credit profile by establishing sound relationship with the lenders by being regular in payments. This will assure your eligibility for Canadian mortgage loan and also confirm that to use and have credit is actually beneficial.