How Credit Scores Work in Canada (and How They Affect Your Mortgage)

I’m Arthur Zhao. Let’s start with the framework. In Canada, credit scores range from 300 to 900, and higher is better. According to Equifax Canada (2025), 660 to 724 is generally considered “good,” 725 to 759 is “very good,” and 760 and above is “excellent.”

Here’s a detail people miss: you don’t have one score, you have two. Equifax and TransUnion each calculate independently, and many smaller lenders report to only one bureau. A gap of several dozen points between them is completely normal. Before you buy, I recommend checking both rather than assuming a single number tells the whole story.

The Five Scoring Factors: Where Your Effort Pays Off

According to Equifax Canada (2025) and the FCAC (canada.ca, 2025), your score is built from five weighted factors:

• Payment history (about 35%) — the single most influential factor. One payment reported 30+ days past due can drop a 700+ score by 50 to 100 points.
• Credit utilization (about 30%) — how much of your available credit you’re using. Above 30% starts to hurt; above 60% causes real damage.
• Length of credit history (about 15%) — how long your accounts have been open. Longer helps.
• Credit mix (about 10%) — managing different account types (cards, car loans, a mortgage) responsibly shows lenders you can handle variety.
• New credit inquiries (about 10%) — each hard inquiry stays on your report for three years and may temporarily cost 5 to 10 points.

Most people don’t realize that high utilization drags your score down even if you pay in full every month. The bureaus typically use the balance on your statement closing date, not the balance after you pay. So in the months before a mortgage application, getting each card below 30% utilization often raises your score faster than paying off older debts.

How Lenders Use Your Score to Approve a Mortgage

Your score is never read in isolation, but it’s the first gate. Under Canada Mortgage and Housing Corporation (CMHC) rules, a CMHC-insured high-ratio mortgage (less than 20% down) requires at least one borrower to have a score of 600 (CMHC lowered this threshold from 680 to 600 on July 5, 2021).

In practice, though, many banks offering insured mortgages set their own internal bar at 680 or higher. In other words: 600 is CMHC’s hard floor, but 680+ is the real threshold for the best rates from A-lenders. For conventional mortgages (20% or more down), most major banks likewise want to see 680+ to offer their sharpest pricing.

A word of caution: your score matters, but it is far from the only thing. When underwriting, lenders also weigh your income stability, employment, overall debt load (your GDS and TDS ratios), and where your down payment comes from. I’ve seen clients with a 720 score declined for carrying too much debt, and others who just cleared the cutoff get approved on the strength of solid income. The score is your ticket in; your whole financial picture decides the final terms.

Practical Steps to Raise Your Score Before You Buy

According to the FCAC (canada.ca, 2025), the most effective actions are:

1. Pay on time and in full — payment history carries the most weight, so set up automatic payments to avoid a single missed bill.
2. Keep utilization low — stay under 30% of your total available credit; pay down cards early or request a limit increase if needed.
3. Keep old accounts open — don’t close long-held cards casually, since that shortens your credit history.
4. Limit new inquiries — don’t apply for multiple cards or loans in the months before buying.
5. Check your own report — pulling your own credit report is a “soft” inquiry that doesn’t affect your score and helps you catch errors early.

Q: What credit score do I need to buy a home in Canada?

There’s no single legal minimum. Under CMHC rules, an insured high-ratio mortgage requires at least one borrower to have a score of 600. But most major banks want to see 680 or higher to offer their best rates. Scores between 600 and 680 usually still have mortgage options, just at higher rates.

Q: Why are my Equifax and TransUnion scores different?

Because the two bureaus calculate independently, and many lenders report data to only one of them. According to Equifax Canada (2025), a gap of several dozen points is common. Check both before applying, and remember the lender decides which one they pull.

Q: Does checking my own credit report lower my score?

No. According to the FCAC (canada.ca, 2025), checking your own credit report is a “soft inquiry” that has no effect on your score. Only “hard inquiries” from lenders, triggered when you apply for credit, may temporarily lower it slightly.

Q: How long does it take to improve a credit score?

It depends. Lowering your credit utilization can show results within one or two billing cycles, but repairing a missed payment or building a longer history takes months or more. If you’re planning to buy, I recommend starting to manage your score at least 3 to 6 months ahead.