Borrowing Young and Responsibly- Key to Home Ownership
Young adults dreaming of home ownership need to do more than save for a down payment.
Financial experts recommend anyone 18 and over apply for credit and use it responsibly to build and strengthen their credit score. That means borrowing money and paying it back on time, every time.
"It’s important to start early because the longer you have credit reporting to the credit bureau, the stronger your score and the better your chances of securing a mortgage," says Dave Lytton.
Securing credit when you have no credit history can be challenging. Here are some suggestions:
•Use a prepaid credit card secured by a deposit to demonstrate your ability to make payments each month. Use the card for a year and then ask your bank to drop the security requirement and refund your deposit.
•Get a gas or department store credit card, which have high interest rates but are often easier to get.
•Apply for a consumer loan to purchase something you need, like a car. Again, make payments on time every month.
•Apply for a GIC loan through companies like LendIt Financial and invest the money in a Guaranteed Investment Certificate that will earn interest and help you save for a down payment. Then make regular loan payments that will be reported to the credit bureau.
To learn more about credit reporting visit Canada’s two credit bureaus online at www.equifax.ca or www.tuc.ca
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