How important is my Credit Score?
One of the things lenders consider when deciding whether or not you are a good candidate for a mortgage loan is your credit score. Your credit score is a measure of your financial health and shows lenders their level of risk if they lend you money.
Your credit score is a number between 300 and 900. A credit score above 700 proves you manage your credit well, meaning a lender should feel comfortable letting you borrow money. A lower credit score shows that you have mismanaged your credit, making you more of a risk to the lender, which means you may be required to pay a higher mortgage rate.
Your credit score is built and tracked based on information sent to credit reporting agencies – more commonly known as credit bureaus – by companies that lend you money or issue your credit cards, such as banks, retailers, credit unions, and other financial institutions.
There are two credit reporting agencies in Canada: Equifax Canada and TransUnion. Upon request, both agencies will send you one free copy of your credit report each year, as well as allow you to look up your credit score at any time for a small fee. It is a good idea to check your credit report annually, to make sure there are no mistakes on it.