• Dave Fullerton

Understanding Your Credit Score

We often refer to credit score as one of the four pillars to obtaining successful mortgage approval. Most existing and future homeowners do not pay attention until it is too late, and not understanding its importance often is the difference in qualifying for your next mortgage at the best rate.


Whether you qualify for a mortgage through a bank, credit union or one of our monoline lenders, you should be aiming for a credit score of 680 for at least one borrower (or guarantor), especially if you are putting under 20% down.


Canadian financial institutions and mortgage lenders will thoroughly review one or both reports available from Equifax Canada or Transunion Canada. For this reason, we recommend that our clients monitor their scores regularly.


Both agencies offer paid programs that will provide you with detailed monthly reports. Another great option is a free report through Borrowell. By monitoring your score and history, you can now identify any unauthorized inquiries that could negatively impact your credit score.


Knowledge is Powerful

Early detection and alerts will give you time to make corrections and ensure you have the best opportunity to obtain the best mortgage plan.


What if I Don't Meet the Minimum Score?

If your credit score is accurate but does not meet the minimum score required by most lenders, you will want to review your Utilization Ratio, which is the factor of outstanding balance to your credit limit. The rule of thumb is to keep the Utilization Ratio below 60%


Bottom Line

Home ownership is probably the most significant investment you will make. You can do several things to improve your credit score and your future financial success, including Paying your bills in full and on time. Pay off your debts (such as loans, credit cards, lines of credit, etc.) as quickly as possible.

Helpful tip: pay the ones with the smallest amount owing first and work your way towards the more significant amounts. Please stay within the limit on your credit cards and follow our Utilization Ratio rule of 60% where possible. Reduce the number of credit card or loan applications you submit.


To discuss your unique situation, don't hesitate to get in touch with us.