Understanding Your Credit Score
Understanding Your Credit Score
Introduction
Your credit score is more than just a number—it’s one of the key factors that determines whether you’ll be approved for a mortgage, what interest rates you’ll pay, and how quickly you can own a home in Canada. Whether you're new to the country or starting your financial journey, understanding your credit score can help you take control of your homeownership future.
What Is a Credit Score?
A credit score is a three-digit number that reflects how trustworthy you are with credit. In Canada, scores range from 300 to 900, with higher scores representing better credit history.
Score Ranges:
300 – 559: Poor
560 – 659: Fair
660 – 724: Good
725 – 759: Very Good
760 – 900: Excellent
Most lenders prefer a score above 660 for mortgage approval, though some programs—like rent-to-own—are more flexible for buyers with lower scores.
Why Does Your Credit Score Matter?
When applying for a mortgage or even a rent-to-own program, lenders and landlords use your credit score to determine how likely you are to make payments on time. A higher score can mean:
Better mortgage approval chances
Lower interest rates
Access to higher borrowing limits
Fewer requirements for co-signers or large down payments
What Affects Your Credit Score?
Your credit score is calculated based on several key factors:
Payment History (35%) – Do you pay your bills on time?
Credit Utilization (30%) – Are you using more than 30% of your available credit?
Length of Credit History (15%) – How long have your accounts been open?
Credit Mix (10%) – Do you have a variety of credit types (credit card, loan, etc.)?
New Credit Inquiries (10%) – Have you applied for credit recently?
Even one missed payment can hurt your score—so consistency is key.
How to Improve Your Credit Score
If your score is low or you're starting from scratch, here’s how to improve it over time:
Pay bills on time—every time
Keep credit card balances low
Avoid applying for too many new accounts
Check your credit report for errors
Keep old accounts open, if possible
For newcomers, secured credit cards and consistent bill payments (like utilities and phone plans) are great starting points.
How to Check Your Credit Score
In Canada, you can check your credit score for free through services like:
Borrowell
Credit Karma
Equifax or TransUnion (official bureaus)
Review your report regularly to ensure it’s accurate and to track your progress.
Credit Score Tips for Newcomers
If you’re new to Canada, building credit from scratch can feel overwhelming. Here’s what can help:
Apply for a secured credit card through a Canadian bank
Use credit for small purchases and pay in full
Always pay rent and utility bills on time (some services now report rent payments to bureaus)
Ask if your credit history from your home country can be transferred (some banks allow this)
Conclusion
Your credit score doesn’t define you—but it can shape your financial future. The good news? It’s something you can actively improve with time and smart habits. If homeownership is your goal, now is the time to take small steps that will unlock big opportunities.
At Canadian House Partners, we help you understand how credit affects your path to ownership—and offer flexible solutions like rent-to-own that work for a wider range of financial backgrounds.
