There are essentially two private credit rating firms that produce credit scores which the banks will consider while analyzing your mortgage application. The most well known is Equifax, the other one is Trans-Union. They gather and process the following information:

• The current monthly balance on your credit cards, lines of credit, car loans, furniture loans, etc.
• The minimum payments, and if they were paid on time.
• How often you have overcharged a credit card or loan, and is your total balance above 50% of your total limit?

Each of these elements above combine to positively or negatively affect/create your credit score.

What is considered a good credit score?

• 700 is a strong credit score
• 800 is an excellent score

Credit scores above 650 are generally accepted by all banks. With a score of 650, banks may require an explanation as to why the score low.

• A score between 600-650 is a critical zone where a valid  explanation will allow for the mortgage application to be approved (on a case per case basis ) 
• A score under 600 is rarely accepted by the traditional banks and insurers (CMHC and Sagen or Canada Guaranty). You will need help rebuilding your credit rating and will have to show that you are determined to do so. Certain alternative or private lenders may accept your application, but only under certain circumstances, and the interest rate will be quite high.

In conclusion, your credit rating is one of the primary factors the banks will consider when evaluating your mortgage application. Therefore, it is essential for you to make sure that your credit report is well maintained and to even verify it yourself. You can directly contact Equifax or Trans-Union.

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