How Your Credit Score Affects Your Mortgage Rate in 2019: Mortgage Basics

​One of the main aspects lenders consider when offering mortgage financing is your credit score. Your credit score displays your total financial fitness, and what type of risk you carry with respect to paying a mortgage loan and making your monthly payment.

In Canada, credit scores range between 300 and 900. I have very rarely found a credit score to be as low as 300 or as high as 900, however, if you are somewhere in the middle and can demonstrate that you pay your loans responsibly, you will be eligible for the best credit products with the best mortgage lenders.

If your score is lower than 600, for example, you may be deemed to have bad credit and may have to apply with an alternative or private lender. Your credit score is actually based on algorithms and the information provided to the two main credit reporting agencies in Canada: Equifax and Transunion.

All of your loans whether they are with financial institutions, mortgage lenders, student loans, credit card companies, etc. are reported each month to these agencies.

You may request a free copy of your credit report and credit history from Equifax or Transunion, who has also recently launched a free app called Credit Karma (www.creditkarma.ca)

When you apply for a mortgage, the rate you are offered will depend on your credit score. Here’s an example of the lenders you may qualify with gauged by your score:

• Major banks and financial institutions will require a credit score of between 600 and 900. An interest rate of 2.79%
• Trust Companies and Alternative lenders will require a credit of between 500-750. An interest rate of 4.25%
• Private Lenders may be open to lending to people based on equity or down payment available with a credit score less than 600. An interest rate of over 7.99%. Interest-only.

​What affects your score?

To keep excellent credit or improve your credit score dramatically which will help you accomplish your goals in real estate, be sure to maintain the following:

1. Payment History: Ensure there are no late or missed payments, accounts which are seriously past due or that have gone into collections. Any debts that show they were written off by creditors may damage your score for up to seven years.
2. Don’t Max Out: Credit utilization is a very important factor when it comes to any mortgage application. Do not go over your credit limits or keep your percentage of credit used very high (You should attempt to keep your credit balances 20-40% below the credit limit).
3. Credit History – How long you’ve had accounts open (the longer, the better) New Credit Requests: How often your credit is checked also affects your score. Be sure to only have people pull your credit occasionally and make sure people ask for permission to do so.
4. Types of Credit: Mixing up credit is the best course of action. Diversifying your credit portfolio helps lenders see that you have the capability to responsibly pay many different credit products such as a car loan, student loan, line of credit, mortgage, etc.

As a mortgage broker, we can help guide you through the process and offer suggestions on how to improve your score.

We can help you successfully buy a house, and get your mortgage payments where you need them to be financially. We specialize in home loans so we can be your trusted confidant when buying a home.

If your credit is not deemed satisfactory, we can help mitigate your case to prime lenders which can help you avoid paying higher interest rates.


Call today. 647-773-4849 or email me in confidence at sarah.colucci@coluccimortgage.com 
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Sarah Colucci, Mortgage Agent Lic. M14000929
Mortgage Edge, Broker 10680