How a simple credit error can ruin your home owning dream

The above mentioned scenario happens to many mortgage applicants across Canada every year. All too often, the cause of your credit score dropping isn't due to a missed car payment, student loan or big limit line of credit. The culprit is typically the smaller credit cards you may hold, or unpaid phone bills.

Cell phone providers tend to be very aggressive in collecting their fees, especially after you've cancelled with them, with some cases resulting in the provider sending their case to a collections agency a month after cancelling with them. Having a debt be sent to a collections agency can have mixed results. Collections agencies are typically brought in to help solve a case where a person can't or refuses to pay their debts. However, in some cases, people just don't know they've missed a payment or bill. Reputable collection agencies will make the effort to reach out before proceeding with further measures that result in your credit score dropping.

Attempting to correct the issue can result in an epic battle of "he said, she said". The unsympathetic customer service representative won't fight for you, so what do you do next?

Canadians have had to put off their dream to purchase a home by upwards of months, even years until their credit scores and debt issues have been corrected. In today's day and age, financial institutions are no longer accepting "lost mail" excuses, as we are right in the middle of a technology era where our bills are easily e-mailed to us and ongoing late payments are reminded to us via text messages. It is more important than it has ever been to ensure you maintain a clean credit report.

Here are some tips to avoid having credit score drama:

• If you pay your bills via pre-authorized credit card, be sure to UPDATE these companies as soon as your credit card number changes/expires.
• If you have to argue with a creditor about their mistake, always record the call.
• If you move to a new address, be sure to contact Canada Post. Ask them to forward your mail to the new address for at least six months. Canada Post also offers a service that will update potential mail senders' with your new address.
• Prevent credit surprises by checking your score before you purchase a new home and/or apply for a mortgage. Be sure to do this 90 days before your closing date so that any surprises can be corrected.

Click here to read the full article on the Globe & Mail.