Introduction
Planning to buy a home in Canada? One of the most critical steps before applying for a mortgage is ensuring your credit score is in good shape. Lenders use this number to assess how risky it is to lend to you, and it plays a significant role in determining the interest rate and mortgage terms you’ll receive.
A strong credit score can mean the difference between getting approved by an A-lender (such as a big bank) or being steered toward an alternative or private lender with higher rates. In this post, we’ll break down five effective strategies you can start using today to increase your credit score and position yourself as a strong mortgage candidate.1. Check Your Credit Report for Errors
Start by requesting a free copy of your credit report from Canada’s two major credit bureaus—Equifax and TransUnion. Review it closely for inaccuracies, such as:
Incorrect personal information
Accounts you don’t recognize
Late payments reported in error
Duplicate accounts or outdated debts
2. Make All Payments on Time—Every Time
Your payment history is the single biggest factor in your credit score, accounting for about 35% of it. Even one missed or late payment can cause a significant drop in your score and may stay on your report for up to six years.
Here’s how to stay on top of payments:
Set up automatic payments or calendar reminders
Prioritize at least the minimum due on each account
Avoid deferring payments unnecessarily, especially on credit cards or loans
3. Reduce Your Credit Utilization Ratio
Your credit utilization ratio compares how much credit you’re using versus how much you’re allowed to use. Ideally, you should aim to keep this ratio below 30%.
For example, if your credit card has a $10,000 limit, try not to carry a balance higher than $3,000. Here’s how to manage utilization:
Pay down high balances
Make multiple payments each month if needed
Avoid maxing out cards, even if you plan to pay them off soon
4. Avoid Applying for New Credit Before Your Mortgage Application
Each time you apply for a new credit product (like a credit card or personal loan), a hard inquiry is added to your credit report. Too many hard inquiries in a short period can lower your score and make lenders question your financial stability.
In the months leading up to your mortgage application:
Do not open new credit accounts unnecessarily
Avoid large financing like car loans or buy-now-pay-later plans
Hold off on applying for new store cards or lines of credit
5. Keep Old Credit Accounts Open
The length of your credit history also affects your credit score. Closing old or unused credit cards might seem like a good idea, but it can actually hurt your score—especially if those accounts have long, positive histories.
Instead:
Keep older accounts open and active, even if you use them sparingly
Make small purchases and pay them off monthly to maintain activity
Avoid closing accounts with high credit limits, which can impact your utilization ratio.
Conclusion
Improving your credit score takes time and discipline, but the effort pays off when it’s time to secure a mortgage. Whether you’re a first-time home buyer or looking to refinance, following these five steps can help you qualify for better rates, higher loan amounts, and smoother mortgage approval.
The key is to start early—at least six months before you apply for a mortgage. This gives your credit score enough time to reflect your improvements and present the best possible financial version of you to lenders.
If you're unsure where to start or need help reviewing your mortgage options, feel free to reach out for a free consultation on (437) 684 - 3333. A strong credit score is your gateway to better home ownership opportunities in Canada.Disclaimer
This blog is for informational purposes only and does not constitute financial advice. Always consult with a licensed mortgage professional or financial advisor before making credit or mortgage-related decisions.
