Before you start shopping for a home, check your credit report. I know buyers that had an old unpaid bill from six years earlier suddenly appeared during the mortgage pre-approval process. It had grown to $3,000 and they had to pay it immediately to keep their approval. A five-minute credit check beforehand can save you a big surprise later.

Situations like that are more common than many buyers expect. Old debts that have been forgotten can suddenly appear during the lender’s credit check and change the financial picture very quickly. 

What happened in this case:

• During the mortgage pre-approval process, the lender pulled a full credit report.
• The report revealed an unpaid collection from about 6 years earlier.
• Even if the original bill was small, interest, penalties, or collection fees can increase the balance.
• The lender treats outstanding collections as financial risk, which can:
• Reduce the amount you qualify for
• Require the debt to be paid before approval
• Negatively affect the borrower’s credit score

Because of this, lenders often require the debt to be paid or settled before finalizing a mortgage pre-approval.

Why paying it helped:

Paying the $3,000 likely allowed the lender to:

• Clear the collection from the underwriting conditions
• Reassess the credit profile
• Proceed with mortgage approval without that outstanding liability

Without clearing it, the lender might have:

• Reduced the borrowing amount
• Delayed the purchase
• Declined the application entirely

A useful takeaway for buyers:

• Check your credit report before house hunting
• Resolve old collections or unpaid bills early
• Confirm all debts are in good standing before pre-approval process

It prevents the kind of last-minute surprise and embarrassment you could experience in front of your lender.

Being prepared isn't just smart, it's empowering. This is how you win!

Questions about buying in the West-Kootenays? 

Contact me anytime at 250-551-6021 or bihl@allprorealty.ca