When you’re buying a home, mortgage lenders look at your credit score to determine your approval rates. But what is a credit score? How does it affect your home-buying journey?
Your credit score is a numerical expression that displays your financial status and how much credit you have — in other words, your reputation and credibility with your finances. Your credit begins to build from the very first time you borrow money from a financial institution — for example, the day you get your credit card. After that, any money lending, credit card issues or service providers (like Telus, for example) will send information regarding your financial transactions.
Your credit score is determined by factors such as your payment history, the amount of debt you have and the length of your credit history.
Credit Agencies
There are two Canadian credit agencies — Equifax and TransUnion. Both of these agencies access credit reports across Canada. Anytime you check your credit, it does somewhat impact your credit score, so only check your credit score when necessary!
What Is The Credit Score Range?
Credit scores have a general numerical range of 300 to 900.
What Is a Good Credit Score?
According to
Equifax, credit scores between 660 to 900 are considered ideal. However, it’s important to note there is no exact number that determines where you lie. The 660–990 range is considered “low risk.”
What if My Credit Score Is Lower Than 660?
What Credit Score Is Needed To Buy A House?
Some reports vary, but according to
Loans Canada, you need a credit score of 640 or higher to get approved for a mortgage. Though, they also state that “It would be more accurate to say what credit score range you need. Anywhere between 620 and 680 would be considered a minimum, depending on the lender.”
However, every person’s financial situation differs, so the best thing to do is talk to a mortgage specialist or broker and discuss your options!
What Can I Afford?
This question is best answered by a mortgage specialist, as they look at your overall finances! However, we have a handy mortgage payment calculator on each of our
homes. So, if you’re looking before or after your mortgage pre-approval, you have an idea of what your future home may cost monthly!
Source: https://www.consumer.equifax.ca/personal/education/credit-score/what-is-a-good-credit-score/