Credit Score Needed for a Mortgage

By Loans Canada


If you’re taking out a mortgage in 2022, you may be wondering the credit score you need to qualify. You have come to the right place.

In this article we’ll look at what a credit score is, some positive credit score behaviours you can take today to help in the future and what is considered a good credit score for a mortgage.

What is a Credit Score?

A credit score is a 3-digit number that lenders use to determine you’re creditworthiness. Creditworthiness is just a fancy way of saying how likely you are to pay off any money that you borrow. Credit scores were created with the idea that your past behaviour is a good predictor of your future behaviour.

The higher your credit score, the better. A higher credit score means it will be easier for you to obtain financing at the best rates, all things considered equal. As such, you want to exhibit behaviours that lead to a good credit score throughout your lifetime.


What are Some Positive Credit Score Behaviours?

Similar to brushing your teeth twice a day, you want to get into the good habit of exhibiting good credit score behaviours.

Getting a good credit score isn’t rocket science. A lot of it is common sense.

Payment history is the most important thing when it comes to your credit score. Payment history refers to paying your debt payments on time. The more you do this, the better your credit score should be. Conversely, the more you miss your payments, the more it will hurt your credit score.

Likewise, you don’t want to overextend yourself when it comes to credit. If you have credit cards and lines of credit, you want to aim to carry a balance of less than 30% of your available credit at all times. When you get above 30% of your available credit, that’s when it can start to drag down your credit score. Getting above 50% of your available credit is when it can really hurt your credit score.


What is Considered a Good Credit Score for Mortgage Lending Purposes?

If you want to qualify for a mortgage at a Prime or A lender, you want to aim to have a credit score of at least 620 for an insured mortgage (less than 20% down) and 680 for a conventional mortgage (at least 20% down).

Lenders allow lower credit scores for insured mortgages, as insured mortgages are protected by mortgage default insurance. That means that if the borrower fails to repay the mortgage according to the terms, the mortgage default insurer can step in and pay for any loss that can be recovered by selling the property.

If you hope to qualify for the best mortgage rates, a far better credit score to have is 720. With a credit score of at least 720, you should be able to qualify for a lender’s best mortgage rates. 620 is pretty borderline and you may not qualify at that credit score.


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