A healthy credit rating is important when buying a house. Here are some tips to ensure your credit rating stays healthy:
- Borrow fully secured money. Secured debts are those that are backed up by some sort of asset or guarantee. The most common examples are car loans or mortgages. If you don't pay, the creditor sells the "security". When applying for this type of loan, credit will generally be granted up to 75% of the value of the underlying security. A variation on this is to have someone co-sign or guarantee your debt. In this case, they will be granting credit to your co-signer, not you. If you repay the loan, your record will benefit. If you default, the co-signor will be required to pay.
- Obtain a secured credit card. Placing a sum of money on deposit with a bank and pledging the money as security for the card does this. If you don't make your required payments, the bank will withdraw the money from your deposit and reduce your available credit accordingly.
- Borrow for an RRSP. For some reason, banks view people with RRSPs differently. It demonstrates that you're looking towards your future. When you receive your tax refund, use the refund to repay the loan, thereby paying off the debt more quickly then you were required. This will cause a marked improvement in your report.
- Borrow when you don't need to. Obtain a small line of credit. Use it to pay bills and then immediately pay off the line. Repeat this process and over time, it will have a marked improvement in your credit report.