How Canadian credit scores work — Equifax, TransUnion, and what lenders see
Canada has two credit bureaus: Equifax and TransUnion. Both calculate credit scores on a scale from 300 to 900, though they use slightly different algorithms. Your score from each bureau may differ by 20-40 points because lenders do not always report to both bureaus equally. Mortgage lenders typically pull from one bureau but may check both for borderline files.
When a lender pulls your credit for a mortgage application, they see your credit score plus a detailed report including your payment history, current balances and credit limits, any collections or judgments, and a list of recent credit inquiries. They do not see your income, assets, or employment — those come from separate documentation.
For mortgage qualification, lenders generally categorize scores into tiers. Scores above 680 are considered 'strong' and access the best rates from prime lenders. Scores between 600-680 are 'fair' and may still qualify with prime lenders but at slightly higher rates or with additional documentation. Scores between 550-600 are 'marginal' and typically require alternative or B-lenders. Scores below 550 generally require private lending or a focused credit rebuild before applying.
- Equifax and TransUnion: Canada's two credit bureaus, scores range 300-900
- Scores above 680: best rates from prime lenders and all insurers
- Scores 600-680: prime lenders possible, may need more documentation or higher rates
- Scores 550-600: alternative/B-lenders, higher rates and fees
- Scores below 550: credit rebuild or private lending typically required
A credit score above 680 opens the door to the best mortgage rates from Canada's most competitive lenders.
The five factors that determine your credit score — and which ones matter most
Your credit score is a weighted calculation of five factors. Payment history (35%) is the single largest factor — a single missed payment can drop your score by 50-100 points and stay on your report for 6-7 years. Credit utilization (30%) measures how much of your available credit you are using. Keeping balances below 30% of your credit limit is the general guideline, but below 10% is even better.
Length of credit history (15%) rewards borrowers who have maintained credit accounts for many years. Closing your oldest credit card can actually lower your score by reducing your average account age. New credit inquiries (10%) captures recent applications for credit — each hard inquiry can temporarily reduce your score. Credit mix (10%) considers whether you have different types of credit: revolving (credit cards, lines of credit) and installment (car loans, mortgages, student loans).
| Factor | Weight | What it measures | How to improve it |
|---|---|---|---|
| Payment history | 35% | Whether you pay bills on time | Set up automatic payments, never miss a due date |
| Credit utilization | 30% | How much of your available credit you use | Keep balances below 30% of limit, ideally under 10% |
| Length of credit history | 15% | How long you have had credit accounts | Keep oldest credit card open, avoid opening too many new accounts |
| New credit inquiries | 10% | Recent applications for new credit | Avoid credit applications in 6 months before mortgage |
| Credit mix | 10% | Variety of credit types (revolving + installment) | Having both a credit card and an installment loan helps |
What credit score you need for different mortgage types in Canada
Different mortgage types have different minimum credit score requirements. Insured mortgages (less than 20% down, backed by CMHC/Sagen/Canada Guaranty) typically require a minimum score of 600, though 620+ is more common for approval. The insurers each have their own guidelines within this range.
Uninsured mortgages (20%+ down) from prime lenders typically require 680+ for the best rates, though scores as low as 620 may be accepted with compensating factors like a larger down payment or lower debt ratios. Alternative lenders (B-lenders) generally accept scores from 550-680 but charge higher rates — typically 0.5% to 2% above prime rates. Private lenders may accept any credit score but charge 6-12% and are typically a short-term bridge while you rebuild credit.
- Insured (<20% down): minimum 600, target 620+ — CMHC, Sagen, Canada Guaranty
- Uninsured, prime lenders: 680+ for best rates, 620+ may be accepted with strong compensating factors
- Alternative/B-lenders: 550-680 — rates 0.5-2% above prime, shorter terms
- Private lenders: no minimum score — rates 6-12%, short-term solution only
Your target credit score depends on the mortgage type you need — insured, uninsured, or alternative — with each tier opening different doors.
Actionable strategies to improve your credit score before a mortgage application
The most effective credit improvement strategies depend on your timeline. If you have 6-12 months before applying, focus on the structural improvements: pay down credit card balances below 30% of the limit, ensure all payments are on time, and correct any errors on your Equifax and TransUnion reports. You can request free credit reports from both bureaus once per year by mail or more frequently through paid services.
If you have 3-6 months, prioritize the quick wins: pay down the card with the highest utilization ratio first, avoid opening new credit accounts, and consider becoming an authorized user on a family member's well-managed credit card to boost your credit history. If you have less than 3 months, focus on correcting report errors and ensuring all accounts are current — significant score improvements take time.
A common mistake is closing credit cards after paying them off. This reduces your available credit (increasing your utilization ratio) and may shorten your credit history — both of which lower your score. Instead, keep the accounts open with zero balance. Another mistake is applying for multiple mortgage pre-approvals with different lenders in a short period, which generates multiple hard inquiries. Most credit scoring models treat multiple mortgage inquiries within a 14-45 day window as a single inquiry for scoring purposes.
- Request free credit reports from Equifax and TransUnion — check for errors and dispute inaccuracies
- Pay down credit card balances below 30% of limit (under 10% is even better)
- Set up automatic minimum payments to avoid ever missing a due date
- Do not close old credit cards — keep them open with zero balance
- Avoid new credit applications in the 6 months before your mortgage application
- Become an authorized user on a family member's well-managed credit card
Like a well-maintained home, a strong credit score is the result of consistent, small investments over time — not a quick fix.
Frequently asked questions
What is the minimum credit score for a mortgage in Canada?
For insured mortgages (less than 20% down), the minimum is typically 600, though 620+ is recommended. For uninsured mortgages from prime lenders, 680+ is the target for the best rates, though 620+ may be accepted with strong compensating factors. Alternative lenders accept 550-680, and private lenders have no minimum but charge significantly higher rates.
How do I check my credit score without hurting it?
You can check your own credit score anytime — this is a 'soft inquiry' that does not affect your score. Equifax and TransUnion both offer online access. Many Canadian banks and credit card companies also provide free credit score monitoring to their customers. You are entitled to one free credit report per year from each bureau by mail.
How long does it take to improve a credit score by 50-100 points?
Paying down high credit card balances (the fastest lever) can improve your score by 20-50 points within 30-60 days, as utilization updates monthly. Correcting report errors can add 20-50 points within 30-90 days. Building payment history takes longer — 6-12 months of on-time payments for a meaningful improvement. A 100-point increase typically requires 6-18 months of consistent positive credit behavior.
Does checking my credit for a mortgage pre-approval hurt my score?
Yes, a mortgage pre-approval typically involves a 'hard inquiry' which can lower your score by 5-10 points temporarily. However, most credit scoring models treat multiple mortgage inquiries within a 14-45 day window as a single inquiry — so shopping with multiple lenders in a short period should not compound the impact. The inquiry stays on your report for 3 years but the score impact fades within 6-12 months.
What credit score do CMHC, Sagen, and Canada Guaranty require?
All three mortgage insurers generally require a minimum credit score of 600, though they prefer 620-650+. Individual insurer guidelines may vary — CMHC tends to be the strictest, while Sagen and Canada Guaranty may be more flexible for borrowers with strong compensating factors like a larger down payment or lower debt ratios. A broker can assess which insurer is most likely to approve your specific credit profile.
Turn this guide into a mortgage plan
Check your debt service ratios, calculate what you can afford, or book a consult with a Pragmatic Mortgage broker.
