Elevation Mortgage Elevation Mortgage
Call Us 403-828-8832
Book a Phone Call with Julie
Book a Phone Call with Andy
  • Home
  • Mortgage Calculator
  • Mortgage Solutions
    • First Time Home Buyers
    • Home Renovation
    • Mortgage Renewal
  • Blog
  • Connect With Us
Elevation Mortgage Elevation Mortgage
  • Home
  • Mortgage Calculator
  • Mortgage Solutions
    • First Time Home Buyers
    • Home Renovation
    • Mortgage Renewal
  • Blog
  • Connect With Us
Sep 23

Your credit – the factors and impacts on credit scores

  • Mortgage News, Understanding Credit

Credit scores are intended to help financial risk managers and others make fair decisions on whether or not to “take a risk” on someone. The risk might involve giving that person a loan (will they repay it?), offering a credit card (will they make the payments?) or approving their apartment rental application (will they pay their rent?). Credit scores are designed to predict the likelihood that individuals will pay their bills.

While your credit score is important, it is only one of several pieces of information an organization will use to determine your creditworthiness. For example, a mortgage lender would want to know your income as well as other information in addition to your credit score before it makes a decision.

The main factors involved in calculating a credit score are:

  • Your payment history
  • Your used credit vs. your available credit
  • The length of your credit history
  • Public records
  • Number of inquiries into your credit file

If you look at your credit scores based on data from both national credit reporting agencies – Equifax and TransUnion – you may see different scores. This is completely normal. Each credit bureau has multiple scoring algorithms and lenders typically request only one of them when making decisions. While all score versions have the same purpose (to predict the likelihood people will pay their bills), there are some differences in the calculations.

The factors and percentage of impact on credit

Payment History 35%

Your credit history includes information about how you have repaid the credit you have already been extended on credit accounts such as credit cards, lines of credit, retail department store accounts, installment loans, auto loans, student loans, finance company accounts, home equity loans and mortgage loans for primary, secondary, vacation and investment properties.

In addition to reporting the number and type of credit accounts that you’ve paid on time, this category also includes details on late or missed payments, public record items and collection information. Credit scoring models look at how late your payments were, how much was owed, and how recently and how often you missed a payment. Your credit history will also detail how many of your credit accounts are delinquent in relation to all of your accounts on file. For example, if you have 10 credit accounts (known as “tradelines” in the credit industry), and you’ve had a late payment in 5 of those accounts, that ratio may impact your credit score.

Credit balance vs credit limit – 30%

A key part of your credit score analyzes how much of the total available credit is being used on your credit cards, as well as any other revolving lines of credit. A revolving line of credit is a type of loan that allows you to borrow, repay, and then reuse the credit line up to its available limit.

Also included in this factor is the total line of credit or credit limit. This is the maximum amount you could charge against a particular credit account, say $2,500 on a credit card.

Credit history – 15%

This section of your credit file details how long your credit accounts have been in existence. The credit score calculation typically includes both how long your oldest and most recent accounts have been open. In general, creditors like to see that you’ve been able to properly handle credit accounts over a period of time.

Public Records – 10%

Those who have a prior history of bankruptcy, or have had collection issues or other derogatory public records may be considered risky. The presence of these events may have a significant negative impact on a credit score.

Inquires – 10%

Anytime an individual’s credit file is accessed for any reason, the request for information is logged on the file as an inquiry. Inquiries require the consent of the individual and some may affect the individual’s credit score calculation. The only inquiries which may impact a credit score are those related to active credit seeking (such as applying for a new loan or credit card). These inquiries are known in industry jargon as “hard pulls” or “hard hits” on your credit file. The hard inquiry may be the leading indicator, the first sign of financial distress that appears on the credit file. Of course not every inquiry is a sign of financial difficulty, and only a number of recent inquiries, in combination with other warning signals on the credit file should lead to a significant decline in a credit score.

Your credit score does not take into account requests a creditor has made for your credit file or credit score in order to make a pre-approved credit offer, or to review your account with them, nor does it take into account your own request for a copy of your credit history. These are some examples of “soft inquiries” or “soft pulls” of your credit.

Next step – if you are considering buying a home in the near future contact us. We can walk you through all the details you need to know, we can access your credit and if there are improvements to be made we can guide you in the right direction!

Other Blogs You Might Enjoy
Take the Stress out of Buying Your First Home

Take the Stress out of Buying Your First Home

Buying a home should be fun, not... read more →
November 30, 2022
You are pre-approved! What’s next in the mortgage process?

You are pre-approved! What’s next in the mortgage process?

Congratulations! You are pre-approved. Congratulations! You are formally pre-approved. A pre-approval means that our team... read more →
November 23, 2022
Ready to buy a home?

Ready to buy a home?

We are here... read more →
September 23, 2022
Like this post? Please share with your friends!

Related Posts

  • The top five things that decrease your credit score.June 23, 2022
  • Understanding your credit bureauJune 23, 2022

Comments are closed.

Recent Blogs

  • Take the Stress out of Buying Your First Home
  • You are pre-approved! What’s next in the mortgage process?
  • Ready to buy a home?
  • Your credit – the factors and impacts on credit scores
  • CMHC Guideline Changes

HAVE A QUESTION?

    Blog Categories

    elevationmortgageyyc

    Andy Jeffery l Julie Jeffery - Serving Alberta and BC
    Happy May long weekend! Not a snow flake or cold w Happy May long weekend! Not a snow flake or cold wind to be found 💗🌴🌺🐟🦜🍍🏖️🌊
    Happy long weekend and happy Easter! Beautiful hik Happy long weekend and happy Easter! Beautiful hike today to kick off a few days of rest and relaxation!⛰️
    I know, we wish love made the world turn 💙 It s I know, we wish love made the world turn 💙 It sure helps but money and how it’s earned, spent, saved and managed is so important to mortgage pre-approvals. Money is such an emotionally charged subject, it’s complex and can be confusing. So we are here to really listen and support our clients. 

The strongest mortage applications are all about money. But not in the way you may think! 💲

Downpayment is important but mortgage approvals at 5% down are just as strong (in a lenders view) as those that are 20% down. 🤓

Income is a critical driver of all mortgage applications. The amount of verifiable income, directly correlates, to the amount of a mortgage approval. That can be salary, hourly, seasonal, contract or self- employed. Consistency year over year is the key.👷🏼‍♀️🧑‍🍳🧑‍🌾👩🏼‍💼🧑‍🚀🧑🏻‍🚒👩‍🔧

We ask lots of questiond around income and collect all required documents to verify income at the preapproval stage. We want to be 100% confident that a lender will approve the mortgage application once our clients find the right property. 🏙️

Debts are a big part of the equation. The less the better, but if there is enough income to support both the new mortgage amount and the debt then debt loads don’t impact mortage pre-approvals. Credit scores are very important. 680 is a good benchmark for the minimum score a lender wants. Buy exceptions are made at lower levels. 

So don’t let money and the stress it can bring keep you from deciding to start a mortage pre-approval! It’s just a conversation, with no pressure, and sharing of our mortgage knowledge and advice. ☺️

📲Julie 403-828-4832
📧 julie@elevationmortage.ca

📲 Andy 403-828-8832
📧 andy@elevationmortgage.ca 

Give us a call or send an email. DM us or visit our website to book a meeting! Link in our bio.
    It’s so cold 🥶! Aren’t we all dreaming of w It’s so cold 🥶! Aren’t we all dreaming of warm, cozy spaces in our homes? 🤍

Our clients just purchased a quaint and beautiful cottage style home in Sunnyside. Absolute stunner!
There’s something wonderful about a renovated heritage home. The cozy factor is very high. The neighbourhood is established, highly walkable and the streets are lined with trees. Sounds perfect! So exciting. 

My go to interior designer for stunning, warm, thoughtful and super cosy design is @amberinteriors. Every room is perfection. Such great style. Enjoy and stay warm today!
    Load More... Follow on Instagram

    Elevation Mortgage Licensed by Mortgage Connection

    To STAY  IN  TOUCH with the latest on Mortgages trends and interesting ways to manage the equity in your home, Sign Up for the Elevation Mortgage Newsletter.

      Contact Us

      ELEVATION MORTGAGE

      julie@elevationmortgage.ca
      Julie: 403.828.4832

      andy@elevationmortgage.ca
      Andy: 403.828.8832

      elevationmortgageyyc

      Andy Jeffery l Julie Jeffery - Serving Alberta and BC
      Happy May long weekend! Not a snow flake or cold w Happy May long weekend! Not a snow flake or cold wind to be found 💗🌴🌺🐟🦜🍍🏖️🌊
      Happy long weekend and happy Easter! Beautiful hik Happy long weekend and happy Easter! Beautiful hike today to kick off a few days of rest and relaxation!⛰️
      I know, we wish love made the world turn 💙 It s I know, we wish love made the world turn 💙 It sure helps but money and how it’s earned, spent, saved and managed is so important to mortgage pre-approvals. Money is such an emotionally charged subject, it’s complex and can be confusing. So we are here to really listen and support our clients. 

The strongest mortage applications are all about money. But not in the way you may think! 💲

Downpayment is important but mortgage approvals at 5% down are just as strong (in a lenders view) as those that are 20% down. 🤓

Income is a critical driver of all mortgage applications. The amount of verifiable income, directly correlates, to the amount of a mortgage approval. That can be salary, hourly, seasonal, contract or self- employed. Consistency year over year is the key.👷🏼‍♀️🧑‍🍳🧑‍🌾👩🏼‍💼🧑‍🚀🧑🏻‍🚒👩‍🔧

We ask lots of questiond around income and collect all required documents to verify income at the preapproval stage. We want to be 100% confident that a lender will approve the mortgage application once our clients find the right property. 🏙️

Debts are a big part of the equation. The less the better, but if there is enough income to support both the new mortgage amount and the debt then debt loads don’t impact mortage pre-approvals. Credit scores are very important. 680 is a good benchmark for the minimum score a lender wants. Buy exceptions are made at lower levels. 

So don’t let money and the stress it can bring keep you from deciding to start a mortage pre-approval! It’s just a conversation, with no pressure, and sharing of our mortgage knowledge and advice. ☺️

📲Julie 403-828-4832
📧 julie@elevationmortage.ca

📲 Andy 403-828-8832
📧 andy@elevationmortgage.ca 

Give us a call or send an email. DM us or visit our website to book a meeting! Link in our bio.
      It’s so cold 🥶! Aren’t we all dreaming of w It’s so cold 🥶! Aren’t we all dreaming of warm, cozy spaces in our homes? 🤍

Our clients just purchased a quaint and beautiful cottage style home in Sunnyside. Absolute stunner!
There’s something wonderful about a renovated heritage home. The cozy factor is very high. The neighbourhood is established, highly walkable and the streets are lined with trees. Sounds perfect! So exciting. 

My go to interior designer for stunning, warm, thoughtful and super cosy design is @amberinteriors. Every room is perfection. Such great style. Enjoy and stay warm today!
      Did you complete a mortage pre- approval in 2024? Did you complete a mortage pre- approval in 2024? Well it’s time for an update! 

We are reaching out to our pre-approved clients from 2024 and updating mortgage pre-approval details, chatting about lender options and interest rate changes.🤓 

As we head into the spring housing market - it’s time to update your mortage pre-approval details. 

Income may have changed, maybe you received a bonus or overtime pay in 2024? A salary or hourly rate of pay increase? Or maybe you reduced your work hours?

Debt loads on credit cards and lines of credit fluctuate so it’s best to update the details. A new car loan added into a mortage application can be very impactful. 

You may have discussed purchasing a home with immediate family, and they offered a gift of downpayment funds? Savings also fluctuate, so now is the time to review your mortage pre-approval details. 

Prime has reduced, this will continue throughout 2025. Now is the time for expert advice on rate choices! 

If you are pre-approved at your bank - you need a second opinion. 👋🏻 We work with many lenders and can review lender policy and interest rate options at all lenders both during your pre-approval and again when you have an excepted offer on a home. Don’t miss out on the option to shop your interest rate and to understand lender fine print. 

#yyc #yycmortgages #yycrealestate #yycmortgagebroker
      BIG NEWS! 🚨 The Bank of Canada announced a 0.25 BIG NEWS! 🚨 The Bank of Canada announced a 0.25% Prime Rate reduction this morning! 📉 Economists expect another .50% this spring and up to an additional 1% this year. We may need to shine our 🔮 - with so many factors in play, including inflation, unemployment, economic growth or lack of, and the dreaded tariff talk - it’s a wait and see environment as to how low Prime will go. 

For today, this means lower interest rates for many of you - IF you have a variable rate mortgage OR a line of credit.🏡 Fixed rates are just that - fixed and set for the term. Variable rates move up or down or stay steady based the Prime rate. Most lenders now have a Prime rate of 5.20%. Variable rates are always Prime and a discount off of Prime. Each lender sets their unique discount. This is what we “shop” for our clients - the discount off of Prime, the fine print relating to the mortgage and most importantly, a great variable rate with a lender that allows and offers  competitive fixed rates if and when you want to lock in. 🤓

Ready to see how this affects you?
DM us or visit our website to book in with us. Let’s explore your options and find the best mortgage solution for your needs.

#MortgageRates #BankofCanada #HomeBuying #FinancialGoals #ElevationMortgage
      Winter magic at @mountengadine! Favourite place. 💙 Snow showing, fat bikes, winter hikes, Nordic skiing and the most stunning scenery. The food is epic and all included in the price. Such a great value. Lunch break with my guitar player. 😍 #mountengadinelodge #canadianrockies #albertalodge
      2024 camera roll. 📸 ✨What a year. ✨ One of 2024 camera roll. 📸 ✨What a year. ✨ One of the best, ever! 

In early 2024, we set intentions to build the life of our dreams, focused on adventure, authenticity and home. 🤩 Our 2024 words were fun - fitness - family - finance. 

Beyond grateful for our little family ❤️, two amazing teens (proud of these kids for digging into new experiences and achieving goals) and great friends (new and old), love and kindness, a bit of magic 🪄🔮, my husband’s fantastic coffee ☕️ and breakfast skills, his capacity for fun, musical taste 🎶 and his willingness to always say yes to my wild new ideas, our business and and clients (🙏🏻 gratitude for a great year), travel, foodie experiences and exploring. Nature gave us so much charity in 2024. What a gift. 

2025 is all about simplicity - strength - service. Highly recommend choosing a few words to go back to when the path is unclear. 🫶🏻 

Happy New Year, sending our best wishes and love to friends, near and far, for an incredible, healthy and fun 2025! 

💙👋🏻Julie (and Andy) 

🚞🌺🌈☀️🐾🌲🌙🌊🌿🥾🏔️🦅🌎💧🏞️☁️🌱🌳🦌🍄🌠🫶🏻🙏🏻😘
      Load More... Follow on Instagram
      © 2023 Elevation Mortgage | Designed by Oliver and Spence Creative.