How Your Credit Score Impacts Your Mortgage Application


A big part of determining your ability to obtain a mortgage approval and gain access to the best mortgage rates, is your credit score. 

What is a credit score?

There are two companies in Canada that keep track of your credit: TransUnion and Equifax. When you borrow money in the form of a credit card, bank loan, car loan, mortgage or line of credit, the lender reports to these companies about how much you’ve borrowed and whether you’ve made your payments on time. Your ability to borrow within your means and make payments on time is measured in a credit score ranging from 300-900, higher being better.

Why is my credit score important for getting a mortgage?

The average home price in the Edmonton area in April 2021 was $389,773. To buy a home for that amount, you may need a mortgage to finance that—and no lender is going to lend you that much money unless you’ve demonstrated a good history of managing your money and paying your bills on time. In addition to reviewing your employment, the lender will look to your credit score as a signal of whether you’re likely to be able to make your monthly payments. 

How does my credit score impact my mortgage rate?

Generally speaking, the best mortgage rates are available to everyone who meets all the lender’s criteria and has a credit score of 680 or higher. It doesn’t really matter whether your score is 681 or 890, as long as you’re within that range you can qualify for the lowest mortgage rates.

Some borrowers with a score between 600-679 may still receive approval. But, some lenders may have more stringent criteria like reduced debt-service ratios and could reject the application. For example, you may be required to make a larger down payment. You may also pay a slight interest rate premium over the lowest rates.

If your score is below 600, your mortgage pre-approval may not pass with a top-tier lender or with a favourable mortgage rate. Companies known as “b-lenders” may lend to you if you have bad credit, but you will pay a much higher interest rate for the privilege.

What can I do to ensure I’ll receive a mortgage approval?

There are a few steps you can take to improve your chances of mortgage approval, although there’s no guarantee.

First, check your credit score as soon as you know you’ll be shopping for a mortgage – even if you’ve just started saving for a purchase you plan to make in a few years. If your credit needs work, this gives you time to make improvements. If your credit is good, you can plan with confidence.

In addition to your credit score, make plans to stabilize your employment and income. Lenders will favour borrowers who have steady employment history so don’t change jobs right before you plan to buy a home, especially if you’re a first time homebuyer. If you’re self-employed, you’ll likely need a few years of income to qualify.

Finally, contact a mortgage broker and ask to get pre-approved for a mortgage. Pre-approval is a more formal process in which the broker will look at your income, expenses, and debts and give you an accurate number of how much home you can afford to buy. Take this step early so you have time to adjust and improve your credit score for a better chance of approval.

How do I find out what my credit score is?

There are a few ways to get your credit score. You can go to Equifax and/or TransUnion directly and request a free copy of your report. 

The Bottom Line

Your mortgage application with a quality credit score will not only increase your chances of getting approved but also getting better rates. If you have any further questions about credit or how it affects a mortgage application, give me a call at 780-288-0643. I am here to help!

Tatum Neufeld, BComm
Mortgage Broker • Mortgage Tailors


Oh hey there! I’m Tatum.

Whether you are looking for a home purchase mortgage, renewing an existing mortgage, refinancing, debt consolidation, financing revenue properties or a new home construction mortgage, I take the stress and worry out of the equation.


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