What is the Best Credit Setup to Get a Good Mortgage?

Credit... The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.

When you borrow money to buy a house, you will be required to prove that you have a good history of managing your credit. 

But what exactly is a “good history of managing credit”? What are lenders looking at when they assess your credit report?

An easy way to remember the minimum requirements for credit is the 2/2/2 rule. 2 active trade lines for a minimum of 2 years, with a minimum of a $2000 limit (although $1500 should be okay).

What is the Best Credit Setup to Get a Good Mortgage?

Two active "trade" lines. You receive a trade line on your credit report anytime a lender extends you credit.

This could be a credit card, a loan with regular payments, or a line of credit. Your repayment history is kept on your credit report. 

In order for a trade line to be considered active, you must use it at least once every three months. Even if you use your credit card for a $20 purchase and pay it in full, that is considered being active.

Have questions about your credit and how it will affect your upcoming mortgage application or refinance? Call me @ 416.707.1020 or message me. I will let you know how to set your credit up to get the best mortgage for you!