our credit score is one of the most important factors lenders consider when deciding whether to approve your mortgage — and what interest rate they’ll offer you.

In 2025, with stricter lending guidelines and higher household debt levels, a strong credit profile is more important than ever.

This guide will show you:

• How credit scores are calculated in Canada

• The exact steps to improve your score before applying for a mortgage

• How long changes take to show up

• Common mistakes to avoid

1. How Credit Scores Work in Canada

In Canada, credit scores range from 300 to 900, with higher scores meaning lower perceived risk for lenders.

Score ranges:

• Excellent: 760–900

• Good: 725–759

• Fair: 660–724

• Poor: Below 660

Credit bureaus like Equifax and TransUnion track your financial behaviour using five main factors:

2. Steps to Boost Your Credit Score Before a Mortgage Application

A. Pay All Bills on Time (Non-Negotiable)

Even one late payment can drop your score by 50+ points. Set up automatic payments for utilities, credit cards, and loans.

B. Reduce Credit Utilization

• Keep credit card balances below 30% of your limit.

• Example: If your limit is $10,000, aim to stay under $3,000.

• Paying balances down right before your statement date can make a quick difference.

C. Avoid Opening New Accounts

Each hard inquiry can lower your score temporarily. Opening multiple accounts in the months before a mortgage application is a red flag for lenders.

D. Maintain Old Accounts

Closing your oldest credit card shortens your credit history and can hurt your score. Keep them open (even if you use them rarely).

E. Diversify Credit Types

A mix of revolving credit (credit cards) and installment loans (auto loan, personal loan) can help your score.

3. How Long Does It Take to Improve a Credit Score?

• Quick fixes (1–2 months): Paying down high balances, correcting errors on your credit report.

• Medium-term (3–6 months): Building a consistent payment history, lowering utilization.

• Long-term (12+ months): Establishing deep credit history and multiple positive accounts.

4. Mistakes That Can Lower Your Score Before a Mortgage

• Making large purchases on credit right before applying.

• Missing small bills (like cell phone or internet) — they count.

• Applying for store cards for discounts — the hard inquiry can cost you points.

5. How Lenders View Your Credit Score

Even small changes can have big financial impacts:

That’s a $411/month difference just because of credit score. Over 5 years, that’s over $24,660 in interest.

Bottom Line

Improving your credit score before applying for a mortgage is one of the most powerful ways to save money over the life of your loan.

Start making changes at least 6 months before you apply — and monitor your score regularly through Equifax, TransUnion, or a free service like Borrowell.

📊 Want a free credit readiness review?
I’ll analyze your current credit situation and give you a step-by-step plan to maximize your score before your mortgage application.

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