How your credit score affects your mortgage rate
When you apply for a mortgage, lenders look at your income, your debts, and — critically — your credit score. That three-digit number can change the rate you are offered, the size of mortgage you qualify for, and even whether you qualify at all.
What is a good credit score in Canada?
Credit scores in Canada range from 300 to 900. Most banks and monoline lenders want to see at least 680 for their best insured rates.
- 760 and above: excellent — access to the deepest discounts
- 725 to 759: very good — competitive rates
- 680 to 724: good — most lender requirements met
- 600 to 679: fair — expect higher rates or alternative lenders
- Below 600: poor — private or B lenders, much higher rates
How much can the rate difference cost you?
The gap between a strong score and a weak one can be one to two percentage points. On a $500,000 mortgage over 25 years, that difference can add up to tens of thousands of dollars in extra interest.
Five ways to raise your score before you apply
- Pay every bill on time. Payment history is the single biggest factor.
- Keep credit card balances under 30% of their limits. Under 10% is even better.
- Do not close old accounts. Length of credit history helps you.
- Limit new credit applications. Each hard pull can shave points off.
- Check your report for errors at both Equifax and TransUnion, and dispute anything wrong.
Tip: Start improving your score at least six months before you plan to apply for a mortgage. Credit improvements take time to show up in your file.
The bottom line
A stronger credit score is money in your pocket when mortgage shopping. Pull your free report, clean up any issues early, and you will walk into rate negotiations from a position of strength.
This article is for informational purposes only and does not constitute financial advice. Rates and product details change frequently — always compare current offers before making a decision.
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