How the credit bureau gathers your info

Whether you’re applying for a consumer loan or a mortgage loan, every lender will request your credit report, which is an indicator of how you pay your outstanding debts. This information is calculated into a score, which lenders use to approve or deny you a loan.

There are two major credit reporting agencies in Canada -- Equifax Canada and Trans Union of Canada. Both these agencies get their info directly from the institutions where you have applied for a loan. Once Equifax and Trans Union get the information, they will update your file and make appropriate changes. For example, if you’ve moved or if you’ve changed jobs, that information gets updated.

Each month, these member agencies, which  include banks, finance companies, auto leasing companies, credit card companies and retailers will send information about every consumer loan to Equifax and Trans Union. So if you’ve missed a payment one month, it will be reflected on your credit report. If the next payment is on time, it will cancel out the last report; however, the credit agencies will keep a notation of the arrears.

What You Need to Know About Your Credit Report

Your credit report and score are important tools for acquiring a loan of any kind including a mortgage. So it’s in your best interests to understand what your credit report is and what’s on there. It’s advisable to get a copy of your credit report at least once a year to make sure all the information is correct. Both agencies receive billions of data each month from banks, finance companies, credit unions, retailers – just about everyone who grants credit  -- so it’s easy to see how mistakes could be made.

The major sections include: your personal identification, a consumer statement, credit information, public record information, third-party collections and inquires. 

First and foremost, it’s important to make sure your identification information is accurate.  Secondly, your credit information, which shows your payment history, should not exceed 30 per cent of all credit granted. For example: if you have credit cards, lines of credit etc. with available credit of $10,000, make sure you have only used $3,000.

Third-party collections need to be cleared up before applying for a mortgage.  And finally, limit your enquiries by not applying for too much credit before applying for a mortgage. Too many enquiries lower your score.

To access your credit reports go to www.equifax.ca or www.transunion.ca. You can also purchase your report online as an instant download. If you need repairing your credit, your mortgage professional can help.


 

Low rates, recession and debt

The Bank of Canada has recently kept its benchmark lending rate at 1% so the banks have kept their Prime lending rate at 3%. Fixed rates are heavily discounted – a posted rate of 5.39% can be had for 3.59%. Lines of credit are at Prime plus .50 or plus 1% depending on the lender.  However, this cheap money is not without its costs.

Canadians are now carrying an enormous amount of debt, not only in mortgages but in non-mortgage debt, including credit cards, personal loans, lines of credit, etc. This, despite the warnings from policymakers of the danger of carrying these debt loads if interest rates do go up.

Are we heading for a recession as some newspapers and other media suggest? One economist thinks we’re already in a recession. Derek Burleton, deputy chief economist for TD said that we are in a “balance-sheet recession that will take years to shake off so interest rates will stay low for a very long time.”

Even the Wealthy Barber David Chilton has jumped back into the fray with his latest book warning about the dangers of saving too little and taking on too much debt.

With 24/7 news, our financial state of affairs gets far too much analysis, and we get very contradictory statements. It’s not all doom and gloom. A recent poll found that most Canadians feel they have their debt situation under control. And a majority of those polled saw paying down their debt as more than or just as important as saving for the future.

The bottom line is this: Cut your debt while you’re still working and interest rates are low. When rates to go up, you won’t be handing over your well-earned money. Instead, you’ll be on the receiving end because you’ve invested wisely.

And with mortgage interest rates so low, it’s easier to reduce mortgage principal since more of your payment is going to principal rather than interest -- look at the low rates as a way of owning your home free and clear sooner.

Bank of Canada Maintains Rate at 1 per cent

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

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New Regional Sales Director for TMG British Columbia

TMG The Mortgage Group Canada Inc. is pleased to announce Dan Pultr as Director of Sales for British Columbia. His unique experience on both sides of mortgage lending (prime and subprime), along with his respect for and commitment to the broker channel, makes him a valuable addition to the TMG team.

Most recently, as a Business Development Manager for a non-bank lender, his territory included Victoria and Vancouver Island. His decision to move to the broker side of the industry is based on the relationships he built with brokers and the common values he shares with TMG.

"As a BDM I spent the majority of my time working closely with brokers to help improve their business and to ensure that their clients were satisfied," he said. " I believe my diverse background on the lender side will ultimately help the brokers I work with form stronger relationships with their BDMs and underwriters, and provide their clients with a better overall customer experience"

Dan is looking forward to joining the TMG family. "TMG has really developed over the past couple of years, and I can't wait to help support their growth and vision for years to come."

Mark Kerzner, President of TMG The Mortgage Group Canada Inc. has been impressed with Dan from the moment he met him a couple of years ago. "I am thrilled he has decided to join the TMG team. He embodies the TMG values of professionalism, integrity, and putting the customer first. "

Dan can be reached at dan@mortgagegroup.com or at 1.888.400.8905.

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