Why Your Credit Score Matters for Your Mortgage (And How to Improve It Before You Apply)

If you’re planning to buy a home in Canada your credit score plays a major role in determining the mortgage rates and loan options available to you. Many buyers focus on saving for the down payment, but often it’s your credit profile that ultimately decides how much your mortgage will cost over time.

This guide breaks down the credit score lenders look for, what affects your score the most, and proven strategies—based on Equifax recommendations—to improve your credit before applying for a mortgage.

The Credit Score That Matters Most for Mortgages: 680+

For mortgage lenders in Canada, 680 is the key benchmark. Once you’re above 680, you typically qualify for the best mortgage rates and most competitive products. Many people obsess over chasing an 800+ score, but in reality, anything beyond 680 is largely a vanity metric in the mortgage world.

Going from 700 to 800 won’t get you a better rate.Going from 650 to 680 will.

If you’re below 680, you can still be approved—just expect higher rates and fewer lending options.

What Affects Your Credit Score the Most?

While credit scoring models consider many variables, three factors carry the most weight:

1. Payment History

This is the single most important part of your credit score. Late or missed payments—even small ones—can stay on your report for years.

Tip: Automate your payments to avoid accidental misses.

2. Age of Your Oldest Credit Line

Lenders prefer borrowers with long, established credit histories. Closing your oldest card can shorten your credit age, which may lower your score.

Tip: Keep your oldest credit account open, even if you rarely use it.

3. Credit Utilization

Credit utilization is the percentage of your credit limit that you use. Equifax recommends keeping this under 30% for a healthy score. For example, if your total limit is $10,000, try to keep your balance under $3,000.

Tip: Paying down balances before the statement date can reduce reported utilization.

Beware of Mixed Credit Files (It Happens More Than You Think )

If you have a common name or recently changed your SIN (common for new immigrants transitioning from a work permit to permanent residency), your credit report may accidentally include someone else’s accounts, addresses or employer information.

This is called a mixed credit or merged credit file, and it can impact your mortgage application even if your score looks fine.

Mortgage lenders review:

• each credit line

• payment behavior

• credit limits

• and past delinquencies

A mixed file can disqualify you, delay approval, or raise your interest rate.

A recent client of mine had merged credit which we got corrected before applying for a mortgage to ensure they get approved in time.

How to check if you have merged credit? Create a free myEquifax account and review your credit report carefully. If you see accounts you don’t recognize, dispute them immediately.

Equifax-Recommended Ways to Improve Your Credit Score

If you want to strengthen your profile before applying for a mortgage, here are actionable steps based on Equifax’s guidance:

1. Always pay bills on time - Set up auto-pay for all recurring bills, no matter how small.

2. Keep your utilization low - Under 30% is great, under 10% will boost your credit score faster than you think.

3. Avoid applying for multiple new accounts - Each hard inquiry can temporarily lower your score.

4. Keep old accounts open - Older accounts boost your credit age, which improves your score.

5. Maintain a responsible mix of credit - A combination of revolving credit (e.g., credit cards) and installment loans (e.g., car loan) can help — just don’t take on unnecessary debt.

6. Check your credit report annually - Be proactive about monitoring mistakes or fraud. It’s easier to clear issues before you apply for a mortgage.

You can also check your credit score on Borrowell, simply create an account using this link.

The Bottom Line:

Build Credit So You Can Borrow Confidently

A strong credit score doesn’t happen overnight, but with consistent habits, it improves steadily. If you aim for 680+, manage your utilization, and monitor your report for errors, you’ll be in a strong position when you’re ready to buy a home or refinance.

Once you’re ready, I can walk you through how lenders evaluate your credit and help you prepare your mortgage application with confidence.

If you’d like help reviewing your credit report or planning your next steps, reach out anytime or BOOK A MEETING HERE.