1. Check Your Credit Report Regularly
Start by requesting your credit report from both Equifax Canada and TransUnion Canada. Review it for errors such as incorrect accounts or outdated information and dispute any inaccuracies.
2. Pay Your Bills on Time
Payment history accounts for a significant portion of your credit score. Set up reminders or automatic payments to ensure you never miss a due date, as even one late payment can negatively impact your score.
3. Keep Credit Card Balances Low
High balances relative to your credit limit can lower your score. Aim to keep your credit utilization below 30 percent of your available limit across all cards.
4. Avoid Opening Too Many New Accounts
Each time you apply for credit, it creates a hard inquiry on your report, which can temporarily lower your score. Limit new applications in the months leading up to your mortgage application.
5. Pay Down Existing Debt
Reducing outstanding balances improves your debt-to-income ratio and demonstrates responsible financial management. Focus on high-interest debt first for the greatest impact.
6. Keep Old Accounts Open
Length of credit history contributes to your score. Keeping older accounts open, even if you rarely use them, can help maintain a strong average account age.
7. Diversify Your Credit Mix
Having a mix of credit types, such as a credit card, car loan, and line of credit, shows lenders you can manage different kinds of debt responsibly. However, only take on credit you truly need.
8. Avoid Major Purchases Before Applying
Large purchases that increase your debt load can negatively affect your credit score and mortgage qualification. Delay significant spending until after you secure your mortgage.
9. Settle Any Collections or Past-Due Accounts
Unpaid collections can significantly harm your credit score. Work with creditors to settle any outstanding accounts and have them updated on your report.
10. Be Patient and Consistent
Improving your credit score takes time. Consistent, responsible financial behaviour over several months will have the most significant long-term impact.
The Bottom Line
A strong credit score can make the difference between a high-interest mortgage and a competitive one. By taking proactive steps to manage your credit, you can increase your chances of qualifying for the best mortgage rates and achieving your goal of homeownership.