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18
Mortgage Financing: Mini Series - Part 1
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18
Mortgage Financing: Mini Series - Part 1
Credit Bureaus
Love it or hate it, the Canadian financial system, as well as most of the First World’s works on credit. Banks lend to customers and business, to each other, to governments, etc. Governments lend to banks, to businesses and to other governments. In fact, everyone lends money to everyone else. The deposits you make at a bank are in turn lent to others for which you are paid interest. It is impossible for the economy to work without credit (or lending).
A large part of the credit / lending systems is made up of home mortgages. For most people, it is impossible to buy a home without a mortgage. Not many of us have $200,000 - $400,000 lying around in the bank in order to buy a home using cash. We therefore go to the bank in order to get approved for a mortgage. However, in order to get a mortgage, the bank will first check our credit rating to see whether we qualify for a mortgage.
So, what is a Credit Rating? And what are Credit Bureaus?
Credit Bureaus
In Canada, there are two primary Credit Bureaus, Equifax Canada Inc. and Trans Union of Canada. These two Credit Bureaus are both the repositories of our credit history as well as the collectors and overseers of our credit histories. They manage and collect data on our credit habits and credit worthiness. Therefore, they are very important. In fact, all the banks and major credit lending institutions, as well as retail stores use their services in order to determine if we are credit worthy. So, anything that occurs with your credit, late payments, amounts owing, new credit requests will more than likely show up on either one of the Bureaus’ system and on your file.
Credit Score / Credit Rating
Your Credit Rating, or Credit Score is basically your credit worthiness as determined by the two credit bureaus. When you hear lenders talk about your credit score, this is what they are referring to. When you hear talk about your credit score, they are referring to the FICO score which appears on your Credit Report. This is a number such as 680, or 720. FICO scores generally range from 501 - 990. The higher the better. A score below 501 means you have really poor credit, and a score in the 900 region means that not even the Bank of Canada can refuse you (a joke of course).
Now, aside from your Credit Score, there is also a Credit Rating given to each credit product you currently have open. Therefore, every credit card or loan is listed. The Credit Rating goes from R0 - R9. An R0 means the account is too new to determine, therefore it does not exactly refer to your repayment history. An R1 means that you pay your debt within 30 days or on-time and you’ve not made any late payments. An R9 means that that debt has already been sent to collections.
Credit Bureau Explanation: Download More Information on Credit Bureaus.
Again, I wish to thank Linda Rudolph of TD Canada Trust for her help in compiling this information.
Linda Rudolph
Manager, Residential Mortgages
Telephone: (416) 282-1677
Fax: (416) 282-5299
Web: Linda Rudolph’s website here
For more information, contact:
Radu Medan
Sales Representative
Coldwell Banker Case Realty, Brokerage
416.250.9000
rmedan@trebnet.com
Information Improvisation:
You can get insurance quote online. So many websites offer you insurance quote. A way of utilizing your money is through investment. It is helpful to give you future returns in long run as well. To get instant loans you have to visit a website of a particular organization. It is not easy to get access to loans instantly. You have to pass through certain stages before getting that. The 1st mortgage is a term refers to the fact that a mortgage has initial claim in the even of defaulting. You can get instant home insurance quotes even for free by getting access to a website through Internet.
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February 18th, 2007
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