Guest contributor: Emmanuela Urbani, Licensed Mortgage Agent
Why do people pull your credit when Home-sharing?
Credit reports are often used to determine how reliable an individual is in paying their bills. When getting a mortgage or pre-approval, a credit report is always pulled. Frequently, credit reports are also used in qualifying someone for home-sharing just as they are used to screen potential renters and job applicants.
There are certain red flags that will be looked at with regards to your credit score. For instance, any consumer proposal or bankruptcy is a significant detractor. Late payments are also shown on your credit report. The number of late payments, as well as your score itself will be considered whenever your credit is pulled.
Should you pull your own credit report?
I always recommend to occasionally request your full credit report through Equifax as well as TransUnion; those are the two credit bureaus in Canada. Equifax is accepted by everyone, and TransUnion is only accepted by some lenders. It is also possible that not all financial institutions / credit lenders report to both credit bureaus. Hence, it is a good idea to occasionally request your full report from both bureaus to verify that no errors have been made that are negatively affecting your score.
Where to get your credit report?
Equifax, TransUnion, Credit Karma, Borrowell are the most common ways to request your credit report. I personally recommend Equifax first because they are the most widely used bureau. It is also a good idea to check with TransUnion as well for errors. However, I do not typically recommend Credit Karma and Borrowell as the first choice; I have seen information omitted from these reports that show up when requesting your full score and report directly from the credit bureaus (Equifax and TransUnion). Note that free credit reports are available through TransUnion and Equifax.
Tips to optimize your credit
First and foremost, you want to ensure that you are paying all your bills on time. It is also good to keep in mind that you should keep your credit usage ideally below 35% of your available credit. It is usually a good thing to have credit available but not used and care must be taken to avoid closing too many old accounts. After several years, accounts that have been closed will drop off your credit report, and if your file is too thin, this can also decrease your credit score. Your credit score will be most negatively affected by having cards or lines of credit above or at the limit. If your financial situation is tight, strategically paying your bills can help keep your score afloat.
When it comes to applying for credit, a lot of individuals become concerned that letting financial institutions or Agents such as myself pull credit too many times will have a negative impact on your score; these types of credit requests are called hard pulls. While it is true that too many hard pulls can negatively affect your score, a grace period is given when making a big purchase such as buying or refinancing a house. Multiple credit requests related to the same inquiry (ex. refinancing your home) will count as one hard inquiry if done within a specific span of time. Keep in mind, anytime you pull your own credit, it has no impact on your score.
Looking to get a mortgage or Home Equity Line of Credit and not sure how to improve your credit?
If you are looking to qualify for a mortgage or home equity line of credit and need to improve your score, it can be a confusing process. I am here to provide an extra set of eyes to look for potential errors and determine what you can do to improve your score. If this process is connected to qualifying for a mortgage or home equity line of credit, I offer this service free of charge. Agents such as myself also have a direct contact line to the credit bureaus and can assist with making corrections and filing disputes in a timely fashion.
Requesting your credit bureau with Equifax: https://www.consumer.equifax.ca/personal/products/credit-score-report/
Requesting your credit bureau with TransUnion: https://secure-ocs.transunion.ca/secureocs/home.html?lang=en
If you’re still unsure and would like more information on how to improve your credit, reach out to Emmanuela. She has the experience and know-how to guide you through the available options and approval process.