Your Credit Score and Your Mortgage: How to Get a Better Deal

Your credit score for a mortgage tells lenders how reliably you’ve handled debt. A stronger score opens the door to A lenders and their best rates, while a weaker one can mean a B lender, a bigger down payment or a higher rate. The good news: you can usually improve it in a few months with the right habits.

How lenders use your credit score

When you apply, the lender pulls your credit report and score. They look at the number and at the details behind it: late payments, collections, how long you’ve had credit and how much you owe.

Your score affects three things:

• Which lenders will approve you. A lenders and default insurers have minimum credit standards. Below them, you may need a B lender.
• Your rate. Some lenders price riskier files higher, especially for uninsured mortgages.
• How much proof you need. A weaker file often means more documents and questions.

Credit is only one part of the picture. Lenders still need your income, debts and down payment to work under the stress test, which qualifies you at the higher of your rate plus 2% or 5.25%.

What affects your credit score?

Factor	What it means	How to improve it
Payment history	Whether you pay on time	Set up automatic minimum payments on every account
Credit utilization	How much of your limits you use	Keep balances low compared with your limits
Length of history	How long your accounts have been open	Keep older accounts open and active
New credit	Recent applications and new accounts	Avoid unnecessary applications before buying
Credit mix	Types of credit, such as cards and loans	Don’t open accounts just for variety

How to check your credit before you shop

1. Get both reports. Request your free credit reports from Equifax and TransUnion. Lenders may use either one.
2. Review every account. Confirm balances, limits and payment status.
3. Look for errors. Accounts you don’t recognize, wrong late payments or old debts still showing as open.
4. Dispute mistakes. Each bureau has a dispute process. Keep copies of everything you send.
5. Watch for fraud. Unknown inquiries or accounts can be a sign of identity theft.

Checking your own credit is a soft inquiry and doesn’t affect your score.

How to improve your credit score for a mortgage

In the next 30 days

• Pay down credit card balances, especially any card that’s close to its limit.
• Set up automatic payments so nothing is ever late.
• Fix any errors you found on your reports.

Over the next three to six months

• Keep utilization low every month, not just once.
• Avoid new car loans, store cards and buy-now-pay-later offers.
• If you have little credit history, consider a secured card and use it lightly.
• Ask your mortgage agent which issues matter most for your file.

Credit mistakes to avoid before buying a bungalow

• Financing furniture or a car before closing. New debt can shrink your approval or even sink it.
• Closing your oldest card. It can shorten your history and reduce your available credit.
• Applying everywhere at once. Multiple non-mortgage applications can lower your score. Mortgage shopping in a short window is often treated more gently, but ask your agent.
• Co-signing for someone else. Their loan counts as your debt.
• Ignoring small bills. A forgotten phone bill sent to collections can hurt more than you’d think.

What if your credit isn’t where it needs to be?

You still have options. A B lender may approve you with a larger down payment and a higher rate, with a plan to move to a bank at renewal. Our guide to A, B and private lenders explains the trade-offs. A co-borrower with strong credit and income can also help, as long as they understand the commitment.

If you’re coming back from a bankruptcy or consumer proposal, read our step-by-step guide to buying a home after bankruptcy.

Frequently asked questions

Does getting pre-approved hurt my credit score?

A pre-approval usually involves a hard inquiry, which can have a small, temporary effect. It’s worth it to know your budget and lock in a rate hold.

How long does it take to improve my credit score?

Paying down card balances can help within a billing cycle or two. Building a long, clean payment history takes longer, often many months.

Can I get a mortgage with bad credit in Ontario?

Often, yes, through a B lender or with a co-borrower. Expect a larger down payment and higher cost, and plan to move to a lower-cost lender later.

Do both partners’ credit scores matter?

Yes. Lenders review every borrower on the application. A weaker score on one side can affect the deal, so work on both files together.

The bottom line

A stronger credit score can mean more lender choice and a lower rate on your bungalow mortgage. Check both reports, pay everything on time, keep balances low and avoid new debt before you apply. Then get pre-approved and set up new bungalow listing alerts so you’re ready when the right home appears.