Is My Credit Score Good Enough For A Mortgage?

credit score

When was the last time you checked up on your credit score? If you’re thinking of buying a home, now might be a good time to do so. In this article, we go over how a credit score impacts your ability to get a mortgage. You’ll find out what a good credit score is and ways to improve it so you can qualify for a mortgage the first time.

How It’s Calculated

They calculate credit scores based on what you do with your available credit. Payment history makes up the highest percentage at 35%. In other words, your history plays a big role, and it’s important to keep up with your regular payments. This includes credit cards, lines of credit, and car or student loans.

How You Use Your Credit

The next important factor in calculating a credit score includes how much you owe. Depending on your current payments for various loans, your lender will determine whether you can take on more. For example, you could be maxing out on your credit cards. A lender may see this as high risk because they don’t believe you can pay for a new loan on time.


Credit utilization looks at the percentage of the debt you have compared to the available credit. Staying below 35% of your available credit shows you’re not maxing out and can help you achieve a higher credit score.

credit score

Credit History

Other factors that go into calculating a credit score include the length of your credit history. The longer the history, the easier it is to build a solid credit score. 


The amount of new credit applications also plays a role. For example, opening multiple new credit accounts could reduce your score because it shows a struggle in keeping up with payments. 


Lastly, the type of credit used, and any record of bankruptcy, are also considered. 

What Is A Good Credit Score?

Here is a breakdown of credit score standing based on Equifax’s scoring system. Scores between:

• 300-559 Are Poor

• 560-659 Are Fair 

• 660-724 Are Good 

• 725-859 Are Very Good 

• 760-900 Are Excellent 


In Canada, Equifax and TransUnion are the two main credit bureaus. Although both calculate their scores slightly differently, they help provide the same information. Banks, credit card companies, insurance companies, landlords, employers, car leasing companies, and retailers can then view your information. 


Most major banks allow you to view your score for free online. Periodically checking your score will give you a better idea of where you stand and how to improve. For a more in-depth report, you can request one from Equifax or TransUnion. In addition, you can request to see your credit report. This report provides information on your payment history, bankruptcies, types of credit, and more. Obtaining a credit report will not impact your score.

Why Credit Score Matters

Credit score matters because it shows how trustworthy you are. From a lender’s perspective, they only want to work with those they know will make their payments on time. In other words, you’ll have more options, flexibility and likely be approved for your mortgage with ease.

The higher your credit score, the more likely a mortgage broker will be able to find the lowest rate available.  In the long run, this can help save thousands on your mortgage payments.

Although it varies, credit scores above 650 allows your mortgage broker to obtain a mortgage approval from a Prime lender. Scores above 650 mean you are a lower-risk borrower, and lenders will be more willing to give you a loan. If you feel like yours could improve, there are a few ways to help increase your credit score.

How To Increase Your Credit Score

The simplest way to increase your credit score is to pay your bills on time. This includes credit cards, cell phones, student loans, or car payments. Skipping or paying late will reflect poorly on your overall score. If you cannot make your payment on time, contact your lender. They may extend your payment due date.


As mentioned earlier, a good score means having a longer credit history. Even if you have a credit card you hardly use, don’t cancel it. The longer the credit history, the better chances you’ll have of building a better score.

Qualifying For A Mortgage

Although credit score matters, it accounts for only part of the big picture. Throughout the mortgage preapproval process, you want to maintain a good credit score as well. If possible, wait to apply for new credit. This includes buying a new car, appliances, or any other loans because they will increase your total debt. Avoid applying for multiple mortgage applications in a short period. This could flag you as a credit seeker. A mortgage broker has access to numerous lenders and will be able to find you the lowest rate available.

Talking To A Mortgage Broker

A mortgage approval can take anywhere between two days to two weeks. However, working with a mortgage broker can help make the process faster and easier. If you’re not sure where your overall standing is for getting a mortgage approval, they can help. They can help you see the big picture by taking in all factors, including your credit score. In addition, they’ll come up with a customized plan for your mortgage preapproval and give you the right advice to get you on the right track.

Are you ready to apply for a mortgage? Contact us today to talk to any one of our experts here at The Mortgage Group Inc. 

Knowing Your Options For A Home Equity Line Of Credit (HELOC)

Home equity line of credit

When it comes to understanding how to consolidate your debt, knowing all of your options is a good start. Many Canadians struggle with debt, be it credit card, car payments, student loans, and especially mortgage payments. We understand how difficult it can be to manage all of this all while taking care of yourself and your family.


credit debt

The first step in understanding how to get back on track by organizing your life to make your debt payments manageable. For this a mortgage advisor is the best place to start. If the option is right for you, they can help you obtain your home equity in order to help pay off your debt. They can also help you restructure your spending habits to make sure you can stay out of debt and make your home equity line of credit (HELOC) count.

Your HELOC will still need to be repaid; however, when you are only paying one payment, with one interest rate, it can drastically reduce stress. Causing things to be less overwhelming, not having multiple bill payments with various interest rates coming in.

What is a Home Equity Line of Credit (HELOC)?

  • Maximum loan-to-value (LTV) = 65% of appraised value
  • It is a line of credit secured by way of a collateral mortgage on the title to your home/property. The interest rate is set by the Prime Rate and is much lower than a personal unsecured line of credit. Maximum Loan-to-Value (LTV) is 65% of appraised value.

Determining Your Equity

Your home Equity is based on the difference between your home’s value and the unpaid balance of your existing mortgage. Home equity has the potential to raise in worth by one of two ways, either you pay your mortgage down and the difference grows, or the value of your home increases.

A stand-alone HELOC has a maximum Loan-to-Value (LTV) of 65%, and a mortgage has a maximum LTV of 80%. You can have a mortgage and HELOC under one charge on a title, going to an LTV of 80%. Just remember, you will need to subtract the amount still owing on your mortgage!

How to Qualify For a Home Equity Line Of Credit


According to the Financial Consumer Agency of Canada, in order to qualify for a home equity line of credit you will require:

A minimum down payment or equity of 35% if you want to use a stand-alone home equity line of credit as a substitute for your mortgage.

Lender Requirements

Your lender will have requirements before you can be approved for a home equity line of credit which include:

  •  A Satisfactory Credit Score
  • Proof Of An Appropriate & Stable Income
  • A Suitable Level Of Debt Compared To Your Income

In order to qualify for a Home Equity Line Of Credit, you will need to pass a stress test. This is to ensure that you can afford payments at a higher rate than the rate of your contact to avoid problems if rates increase. The lender wants to be sure you can pay it off.


HELOC’s are not necessarily subject to the same rate fluctuations as mortgages. HELOC’s are always set with a prime, which means that they fluctuate, but your mortgage can either have a fixed or variable rate.

Potential Benefits Of A HELOC:

Mortgage relief

One of the main benefits of debt consolidation is that it will buy you time and emotional release from current debt pressures. Studies have shown that the stress of too much debt can impact more than your mental health, and it can also be affecting other parts of your life.

HELOC Requirements:

  • Minimum Payments Required = Interest Only. Can Be Paid In Full At Anytime With No Penalties.
  • Readvanceable – The HELOC Can Be Paid In Full & Used Again At
  • Anytime As Needed- Maximum Flexibility
  • Low Interest Rate

A HELOC only has a minimum payment requirement of the interest and will allow you to address your budget and free up your cash flow before making principal payments. By refinancing and being serious about making and keeping to your budget, you can achieve a debt-free lifestyle! While refinancing can extend your mortgage’s life, it can get you onto the path of being debt-free a lot sooner.

home equity, money in your pocket

For more information on a home equity line of credit (HELOC), talk to a mortgage professional. They can help way your options to determine the best course of action for getting your bills and various payments under control with a HELOC. Here at The Mortgage Group, we are here to help you with all of your mortgage questions and concerns. Including, those regarding home equity. Contact us today to better understand how we can help you obtain your home equity line of credit.

Why You Need A Good Credit Report To Buy A Home

credit history report

There are a lot of terms to understand when you are applying for a home mortgage. One of those terms is a credit report.

What Is A Credit Report?

A credit report is a summary of data involving your spending and credit history. It is more important than some people think. Potential landlords, employers, utility companies, and government agencies sometimes use this information, too.

What Information Does It Contain?

checking credit

Your credit report contains personal information such as your name and pseudonyms, birth date, social insurance number, recent and previous addresses, and phone numbers.

It also includes financial information like current and historical credit account types, balances, limits, payments, and the name of the lender. Public information like liens, bankruptcies, foreclosures, court proceedings, and child support payments may also appear on your credit report.

Who Compiles A Credit Report For Your Lenders?

Equifax and TransUnion are the two major companies that gather information on your spending habits. They use all of the collected information to compile reports used by banks and lenders so that they can give you a mortgage approval.

How Are Credit Ratings Scored?

A Person Holding Phone - rating

Credit rating scores are rated 280 to 850, with a 300 rating the poorest and 850 considered an excellent credit score.
About 35% of the rating considers payments and whether you have made late payments. Another 30% looks at credit card use and the balance vs. your credit limit. The remaining 35% of the credit score is based on your credit history, public records, and any inquiries into your credit file.

Inquiries within a short period are usually allowed because they know you may shop various mortgage lenders to secure your homeowner mortgage. Inquiries can affect your rating when you shop around for multiple credit card lenders (called hard hits). It can also happen because you are financially stretched, or perhaps because you have too many maxed-out credit cards.

How Can I See My Credit Rating?

You can ask for your free credit score at Credit Karma, or  though your bank. Even some online companies have a notification service for changes to your score to help you keep track. One thing to keep in mind is that the owing debt that you see, and the score may be off a bit.

In some cases, an account could owe a few hundred more than what the report shows. However, tools like this are still great to give you a base to work with and begin understanding your credit score.

Is My Information Safe?

safe, vault

There is a discussion about whether credit bureaus should have access to this information, but llenders state it is necessary to protect their investments.There are security features in place for online registrations, and they are regulated regarding the release of information complying with provincial legislation.

Why I Need A Good Credit Rating?

A better credit rating makes securing a home mortgage easier. Lenders like to see applicants have a mix of car loans, personal loans, and credit cards to indicate they can handle different kinds of credit. A good credit rating can also act as a reliability meter for signing a lease, securing a utility contract, or sometimes even works as a job character reference.

How To Improve Your Credit Rating

improvement graph

Some people have never borrowed money or signed up for a credit card, leaving them with no credit rating. This can negatively impact you when you do go to apply for credit. Without credit, it can be hard to build credit. Often, secured credit cards are your best first step to establishing a credit history.

Loans or mortgages are not approved until they establish a good rating.
What seems odd is you are required to go into debt to get approval for further financing. By taking out a small loan or credit card and making regular payments to build trust, they will pay off subsequent loans. A poor credit score does not mean denial of a home loan. However, you may have to pay a higher rate of interest on the mortgage.

It is also a good idea to review your credit reports yearly. Sometimes companies make errors about late payments or unpaid bills that can affect your rating. Maybe you are in mediation with that company over mistakes. You have the chance to contact the credit rating bureaus  and get them to investigate the error on your report and change the reason on your credit report itself.

The Alberta MoneyMentors organization offers many financial education and improvement courses and financial counseling. Money Mentors offers for online classes and some great info.

Watch Out For Credit Rating Repair Scams

Some companies will help you improve your credit ratings for a fee. However, not all of these offers are legitimate, and it is up to you to do your homework to see they are reputable for use.

Here Are Some Signs The Service May Be A Scam:
  • They Don’t Provide A Consumer Credit File Outlining Rights & The Credit Repair Process
  • A Business Name & Address Aren’t Provided On The Contract
  • They Don’t Offer Your Copy Of The Contract For Reading Before Signing
  • Costs, Actions To Be Taken & Completion Date Are Not Clearly Outlined
  • They Ask For Payment Before Services Rendered
  • The ‘Agency’ States They Will Remove The Errors From Your Report
  • They State You Need A New Social Insurance Number To Change Your Rating

Sometimes understanding everything about credit ratings can be confusing, so contacting a professional mortgage broker like The Mortgage Group is a good idea. Our Calgary mortgage brokers can explain the mortgage process and credit reports. We will help you gather the information you need to secure a home mortgage.

At The Mortgage Group Calgary, we are committed to providing the best experience to our clients. Call now to book an appointment with one of our brokers, (403) 571-8142.