If you’re hoping to get a mortgage approval this year, your finances better be in order. We’re not just talking about debts, income and assets, we’re also talking about employment status and credit scores. These five factors are essential to getting mortgage approval in Canada.

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Your credit score can be the differentiating factor that determines whether you get approved for a mortgage because most borrowers are hesitant to lend money to those in bad standings.


In 2019, the minimum credit score needed for mortgage approval from one of Canada’s big banks is 640, though some lenders may go as low as 620. Canadian credit scores range from 300 to 900 and the higher your number is, the better.

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If your score falls below 640, it doesn’t mean you can’t get approved for a mortgage, but it does mean you’ll have to seek out alternative lenders. Of course, this means you’ll probably end up paying more in interest too.

Before you go down that path, put in some effort to improve your credit score before you apply for a mortgage, that way you’ll increase your odds of getting approved at a lower interest rate.

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Below, we rounded up five tips to help you improve your credit score in record time.

1. Find And Dispute Errors

Sometimes your bad credit rating may be a result of a banking error. Canada’s two major credit bureaus, Equifax and TransUnion offer one free credit report to consumers a year. You can request a free copy via mail or pay a small fee to check your report online. While the report will not include your score, it does keep track of all credit products you’ve applied for, been approved for, cancelled and denied.

In the event you spot an error, you can send the credit bureau a letter detailing the mistake and asking for a correction. Once a dispute is claimed it can take up to a month to be resolved.

2. Balance Your Credit

If you’re already in debt, increasing your credit limit might seem like a bad idea, but it can actually be a really smart move. When it comes to your credit score, you a good rule of thumb is keeping 30 per cent of your total credit available. If you only have one credit card that is almost maxed out, opening another card with a higher limit can help create that gap. If having the extra credit is too tempting, focus on paying down your debt instead.

3. Pay Bills On Time

This is the easiest way to maintain good credit, but you’d be surprised at how many people fail to do it. If you signed up for e-billing but never check your email, see if your service provider offers phone notifications. Or, set up recurring calendar reminders. If you always maintain a balance in your chequing account (as you should) you can also set up automatic bill payments so you never miss a payment.

Paying in full is another way to improve your score. If your balance is out of control, this probably isn’t an option for you, but once you get it to a manageable rate clearing your debt is a great way to boost your score without having to deal with annoying interest payments.

4. Use Your Credit Card More Frequently

If you have no credit, you have bad credit. Build your credit history by getting a credit card with a small limit. Then, make small purchases and pay them off right away. This shows lenders you can take on and pay back credit easily.

5. Make An Agreement With Collectors

If any of your bills have gone to collections, the damage has been done, but that doesn't mean you're destined to have bad credit. As you pay your bills, send a note to the collection agency and see if you can get them to remove the notation from your credit report or have it marked as paid as agreed.

Personal Finance