One of the important factors in home ownership is understanding things like your credit score.  Some people don’t pay much attention to this metric until they begin the mortgage discussion! However, you will find that your credit score is one of the most important factors when it comes to qualifying for a mortgage at the best rate – and with the most purchasing power.

When it comes to any kind of score, higher is usually better. Same goes for your credit score. A score of 300 to 579 is considered poor, 580 to 669 is fair, 670 to 739 is good, 740 to 799 is very good, and 800 to 850 is excellent.

Credit scores are calculated based on a few factors such as your payment history, your total available credit vs amount of credit used, types of credit accounts in your name, the length of your credit history, and the number of requests for credit you’ve made.

Whether you qualify for a mortgage through a bank, credit union or other financial institution, 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. If you are able to make a larger down payment of 20% or more, then a score of 680 is not required.

If you are not sure what your current credit score is, you can find out through Canada’s two credit-reporting agencies: Equifax Canada and TransUnion Canada. Bank apps usually have this feature to check your credit score in less than 30 seconds, free of charge. Once you have your credit score, always double check that there are no mistakes and ensure you dispute any problems if applicable.

What If I Don’t Meet the Minimum Credit Score?

If your credit score is accurate, but does not meet the minimum requirements, you will want to look at your current debt. Home ownership is an incredible investment, but it is also costly. Fortunately, there are a number of things you can do to improve your credit score as well as your future financial success, including:

• Paying your bills in full and on time. If you cannot afford the full amount, try paying at least the minimum required as shown on your monthly statement.
• Pay off your debts (such as loans, credit cards, lines of credit, etc.) as quickly as possible. Work on paying the ones with the smallest amount owing first and work your way towards the larger amounts.
• Stay within the limit on your credit cards and try to keep your balances as low as possible.
• Reduce the number of credit card or loan applications you submit.

There is also the option of going with an Alternative Lender (or B Lender) if you are struggling with credit issues. The team at Primex can help review your credit score and provide you with strategic options for your mortgage needs. We can also look into consolidating your debt into your mortgage to make it easier for you, in one simple payment. This can help pay off debts faster.

Contact us today to chat about your credit score concerns when it comes to your mortgage!

Trish & The Primex Team