Canadians depend on mortgage financing to bridge the gap between their available down payment and purchase price.
Since conventional mortgage lenders have stricter guidelines such as the Mortgage Stress Test, getting a mortgage loan today can be challenging, which is why your credit score is more important than ever.
So, you may wonder what credit score you need to get a mortgage or the "minimum credit score required"…
First, it's important to realize mortgage lenders look at multiple factors when approving a mortgage application.
Although your credit score is a big (and determining) factor, it’s NOT the only factor. Income, your tenure/length of employment, monthly liabilities, detailed credit history and size of down payment are also important.
But, nonetheless, if you want to get the absolute best interest rate, your credit score needs to be acceptable.
So, what’s a good score?
In Canada, a person’s credit score can range from 300 to 900. Prime lenders (also known as “A” lenders) consider a credit score over 630 to be a good credit score, but as previously mentioned, mortgage lenders also consider other factors.
For example, if your credit score is 630, which is on the lowest end of "good credit", and you have noted delinquencies/missed payments and loans referred to a collection agency and also have a very minimal down payment, your application will likely get declined.
But, if your credit score is 630, and you have great repayment history and a sizeable down payment, a prime lender may feel more inclined to approve your application despite your score being on the lower end.
A credit score of 680 and above is excellent credit.
Working with someone like myself can increase your chances of getting approved because I know exactly what lenders are looking for thus I can help structure your application properly so a lender can look upon it more favourably.
Here are some other factors to consider when applying for a mortgage:
How can you improve your credit score?
There are a couple of actions you can take immediately to improve your credit score and avoid having to apply with a lender offering higher interest rates.
First, make sure you make your payments on time. Second, always keep your balances at least 20% below your credit limit. Keeping your loans above the credit limit can actually work against you, causing your score to plummet.
Do you have any questions about your credit?
Please call or write.
Sarah A. Colucci
Mortgage Agent Lic. M14000929
Mortgage Edge, Broker 10680
Direct: (647) 773-4849
By: Sarah Colucci