How your credit score affects your mortgage
Your credit score can determine how much money you need for a down payment, and what interest rate you qualify for. Most institutions require a 600 minimum, however many require a 680 or higher for discounts and exceptions. Today's algorithm allows a score up to 900.
Tips on maintaining a good Credit Score
Carrying a mortgage is often our number one debt in life, however, it does not earn us any credit score points when mortgage payments are made. That's why it's important to have a credit score plan outside of your mortgage payments to ensure your credit score is high upon renewal.
These tips will help you obtain a good credit score or improve your current credit score.
Falling behind on a few credit card payments will deduct points from your credit score for six years.
Try to never take your credit card debt higher than 75% of your credit limit. For example, on a credit card with a $1000 limit, don't spend more than $750.
You won't gain extra points on your credit score if you have a credit card balance of $0. However, if you maintain a balance below 30% of your credit card limit, then you can earn as much as 20 points for your credit score per month. If you have multiple credit cards, keeping each balance below 30% of the credit limit would increase your credit score by over 40 points a month.
Questions Everyone Should Be Asking
How do I get my credit score?
You can ask for a free copy of your credit file by mail. There are two national credit bureaus in Canada: Equifax Canada and TransUnion Canada. You should check with both bureaus. Alternatively, you can ask any lending institution that you are working with to provide you with a copy of your credit report.
What's a good credit score in Canada?
In Canada, credit scores range from 300 (just getting started) up to 900 points, which is the best score. According to TransUnion, 650 is the magic middle number — a score above 650 will likely qualify you for a standard loan while a score under 650 will likely bring difficulty in receiving new credit.
What information do you need for a credit check?
To receive a free credit score, you'll have to send in photocopies of two pieces of identification, along with some basic background information. The reports will come back in two to three weeks. For TransUnion, the instructions to get a free credit report by mail are available here. For Equifax, the instructions are here.