Your credit rating is based on a “beacon score” established by credit agencies. The minimum beacon score standard when it comes to mortgage financing is 600, but most lenders want to see at least a 620 beacon score, with some even going to a minimum of 650.
The beacon score is your credit ranking established in Canada from two credit agencies: Transunion and Equifax. For a mortgage with less than 20% down in Canada, your minimum beacon score must be 600, although 620 is considered the norm. Some lenders require 650 or higher especially if you are self employed or cant prove your income.
There are ways to improve your credit score in order to obtain a mortgage. Its not pleasant to hear the words “sorry you do not qualify”, it is very important to understand WHY and to work with someone who can help you improve your credit rating so you can qualify for a mortgage.
Here are a few simple tips to help keep and build your credit rating.
— Make at least your minimum required payments each month
— Make your payments on-time, keep in mind banking transactions dont happen over the weekend and electronic transfers can take a couple business days to be received by your creditor
— Actively use your credit cards
— Do not “max out” any credit cards, keep the balances at or below approximately 33% of the allowable limit, spreading out your purchases over several cards may be a strategy.
— Settle any outstanding credit collection issues. You may be best to pay the payment requested and dispute it later as to not have it negatively reported to the credit bureaus.
— Do not cancel credit cards you have had for a long period of time–keep using them even if they dont have all the bells and whistles as your current cards. I suggest using these cards for filling up the car with gas or some other regular bill or transaction.