Between recent data breach scandals and successive interest rate hikes, it’s more important than ever to monitor your credit score, especially if you’re planning to make a big purchase, like buying a home. 

A good credit score can help you get better terms when it’s time to shop around for a mortgage. Of course, to give yourself the best shot at success, you first need to know the minimum credit score required to qualify for mortgages and how you can improve your own credit. 

What is a credit score?

Looking for your dream house? If, like most prospective homeowners, you’ll have to take out a loan to buy it, you’ll need to prove your creditworthiness to lenders. 

Before a lender issues you a loan or a mortgage, it will want to make sure that you can repay what you’ve borrowed and that it won’t be taking a risk by lending to you. It does this by looking at your credit report, a document that reflects your ability to meet your financial obligations on time, including loan payments. 

Credit reports are produced by Equifax and TransUnion, the two main credit bureaus in Canada, based on information about your spending and credit habits that they collect from your creditors. Be aware, however, that the two agencies use different formulas to calculate your score. 

Your credit report contains two different metrics: your credit rating and your credit score.

Your credit rating reflects how well you manage your credit. Each of the credit accounts you use is assessed by the credit bureau and assigned a code made up of a letter (generally R, for revolving credit) and a number ranging from 1 to 9. For example, an R1 rating means that you make your payments on time, while an R9 rating means that you moved without giving a new address, you declared bankruptcy, or the debt has gone to collections. 

Your credit score is a three-digit number from 300 to 900. This is what lenders use to determine your overall creditworthiness. The higher your score, the more likely you are to qualify for favourable mortgage terms.  

Your credit score is influenced by many different factors, including your payment and credit history, the types of credit you have and how you use them, the amount of debt you owe, and how often you’ve applied for credit.

What is considered a good credit score?

Unfortunately, there’s no simple answer to this question, not least because policies vary from lender to lender. However, according to Equifax, a credit score between 660 and 724 is considered good, and a score between 725 and 759 is considered very good. A score of 760 or above is considered excellent. As a general rule, lenders give better terms to applicants with scores above 660, wich can significantly affect the terms of loans they offer.

How to build a credit history

Credit reports don’t appear out of thin air—you have to start somewhere! Whether you’re an immigrant, an international student, or a young adult, it’s important to build a credit history as quickly as possible so that, one day, you can get the financing you need to make your dreams a reality. Here’s how to do it. 

Open a bank account. While it may not directly impact your credit, opening a bank account is the first step in building your credit history, as the bank will start sending your information to one or both of Canada’s national credit bureaus after you open the account.

Buy a cellphone. Paying your monthly phone bill on time will help you establish an impeccable payment history. The same goes for your power and internet bills!

Get a credit card. And make sure you use it properly—that is, avoid going over 30% of your credit limit and always make the minimum payment or (ideally) pay off the entire balance before the due date each month. Use it for your everyday expenses and bill payments. 

Ask your landlord to report your rent. While this is a less common approach, it can still strengthen your credit history. Your landlord simply needs to notify Equifax and TransUnion that you are paying what you owe each month.

What does your credit score mean?

Between 300 and 700

If your credit score is under 600, banks will likely refuse to lend you money due to the risk that you won’t repay the loan. If this is the case for you, don’t despair—there are still ways to buy a house with bad credit. A score between 600 and 700 gives you a better shot at obtaining financing for loans, but you won’t be in a position to negotiate a better interest rate. 

Over 700

A score of 700 or more usually makes it easy to get a loan. If your score is 760 or above, there’s a good chance you’ll get an attractive interest rate and more favourable terms on your loans.

How your credit score affects your mortgage borrowing capacity 

Interest rates

The higher your credit rating, the lower your interest rate. The difference of a fraction of a percentage point in rates may seem trivial, but in reality, it amounts to significant savings! 

Let’s say you buy a $500,000 home with a 5% down payment and a 5-year fixed-rate mortgage with a 25-year amortization period. At a rate of 5.60%, your monthly payment will be $3,044.15. At a rate of 5.45%, you’ll pay just $2,986.64. That works out to a savings of $3,450.60 by the end of the term.

Loan terms

Besides saving you money on interest rates, there are a number of other advantages to having a good credit score, since this means you represent a low risk for lenders. For example, you may be able to borrow more money or opt for a shorter amortization period. You may also be able to make a smaller down payment.Your Multi-Prêts broker can help you make sense of things and, if necessary, improve your credit. You can also get pre-qualified to find out how much you could be eligible to borrow from our lenders!


In 2022, fintech company Borrowell surveyed two million of its members and found that the average credit score in Canada that year was 672, five points higher than in 2021. Per the survey data, Quebec ranked third among the provinces, behind Ontario and British Columbia, with average scores of 687 in Montreal, 683 in Quebec City, 679 in Laval, and 663 in Gatineau. 

There’s no magic number, but knowing the averages can help you get an idea of where you stand and explore ways to improve your credit rating.
First off, make sure you have a clear picture of your credit situation by requesting a free copy of your report from Equifax and TransUnion. Contrary to popular belief, doing so won’t hurt your credit. With your report in hand, you’ll be able to get a sense of what factors are impacting your score, as well as check for errors and fraudulent activity. If something on your report doesn’t look right, you can contact the credit bureau to address the issue. 

Once you have an idea of where you stand, you can start taking simple steps to boost your score, such as paying your bills on time and paying off more of what you owe, limiting credit applications, diversifying your credit accounts, using your credit cards more wisely, and keeping your credit balances low.
While your credit history demonstrates your ability to meet your financial obligations, there are other factors that lenders take into account to determine your creditworthiness: your job stability, the size of your down payment, your employment income, and your debt-to-income ratio. 

While they don’t appear on your credit report, your assets, savings, and RRSPs could also help you get better mortgage terms.

Key takeaways

  • Equifax and TransUnion, the two main credit bureaus in Canada, collect information from your creditors about your spending and credit habits in order to produce your credit report.
  • As a general rule, lenders give better terms to applicants with scores above 660. 
  • The higher your credit rating, the better your chances of getting a low interest rate and attractive mortgage terms.