Thinking about buying a home?
If you’re planning to apply for a mortgage, your credit score is one of the factors lenders may review. A stronger score can sometimes help you qualify more easily or access better rates.
But credit is only part of the picture. Understanding how it fits into the full mortgage process can help you prepare with more confidence.
What is a credit score?
Your credit score is a number that reflects how you’ve used credit over time. In Canada, scores typically range from 300 to 900.
Lenders may check your score through:
- Equifax Canada
- TransUnion Canada
You can check your TransUnion credit score for free through Credit Karma. You can also request your credit reports directly from Equifax Canada and TransUnion Canada.
In general:
- Higher scores suggest lower risk to lenders
- Lower scores may make borrowing more difficult
What credit score do you need for a mortgage?
There’s no single minimum score required across all lenders.
In many cases:
- A score of around 680 or higher may improve your chances with major lenders
- Lower scores may still be accepted by alternative lenders, sometimes with different terms
Your credit score is just one factor. Lenders may also consider:
- Your income and job stability
- Your debt service ratios, which show how much of your income goes to debt
- Your down payment
- Your ability to pass the mortgage stress test
How to check your credit before applying
Before applying for a mortgage, it can help to review your credit reports.
You can:
- Use tools like Credit Karma to check your TransUnion score
- Request reports directly from Equifax Canada and TransUnion Canada
Checking your own credit is considered a soft inquiry, which does not affect your score.
Steps that may help improve your credit score
Improving your credit score can take time, but small actions can add up.
1. Pay your bills on time
Payment history is a major factor in your score. Even one missed payment can have an impact.
2. Keep your credit use low
Try to use a smaller portion of your available credit. This is often called your credit utilization ratio.
3. Avoid applying for new credit
Each application can create a hard inquiry, which may temporarily lower your score.
4. Check for errors
If you notice incorrect information on your credit report, you can dispute it with the credit bureau.
5. Keep older accounts open when possible
A longer credit history may help show stability to lenders.
What is a mortgage pre-approval?
A mortgage pre-approval is when a lender reviews your financial information and estimates how much you may be able to borrow.
It may involve:
- A credit check, sometimes a hard inquiry
- A review of your income, debt, and assets
Pre-approval can give you a clearer home-buying budget, but it is not a final approval.
When should you start preparing?
In many cases, it helps to start several months to a year in advance.
This gives you time to:
- Build positive payment history
- Reduce debt
- Address any credit report issues
Credit improvements do not usually happen overnight, so early preparation can make a difference.
Bottom line
Your credit score can play an important role in getting a mortgage in Canada, but it is only one part of the decision.
By understanding how your credit works and taking a few practical steps, you may be able to improve your position before applying.
Preparing ahead of time can help you feel more informed and confident as you move toward homeownership.
You can check your TransUnion credit score for free and monitor your progress by signing up to Credit Karma here.