If you are preparing yourself to get a mortgage there are a lot of things you need to have in order. A good credit score is one of them. Though various mortgage lenders have different requirements, the Canada Mortgage and Housing Corporation (CMHC) raised the minimum credit score required for insured mortgages from 600 to 680. The minimum credit score is applicable to at least one borrower of the mortgage. So, couples are better off as just one of them needs to be over the 680 markup. Mortgages are called insured mortgages are when the borrower makes a down payment that is less than 20% of the house value. It is above 5% though. So the insurance here is to protect the lender in case the borrower makes default on the payment. Traditional mortgages do not need insurance; hence, the minimum credit score requirement seldom applies though each lender has their own rules. You may be able to get a mortgage even if your credit score is low to a figure like 600. Definition of good credit score As a borrower, you may wonder what is credit score good enough for you to qualify for a mortgage let us share how credit scores work in Canada. Credit scores are between 300 and 900 and rarely will you see people at the lower or upper end of this range. Most people in Canada have a credit score that ranges between 600 and 800. But here's how to interpret your credit score: 800 or more is a great credit score to have Between 720 and 799 - very good credit score Between 650 and 719 - good credit score Between 600 and 649 - so-so credit score Below 600 - poor credit score You must check your credit score and have handy, a copy of your credit report before proceeding to apply for a mortgage. Improve your credit score If you are thinking of applying for a mortgage and feel your credit score is low or poor you must work towards improving it. To maintain a good credit score keep the credit inquiries to a minimum as each inquiry bumps down your credit score. You must pay off the unpaid amounts on your credit cards or loans. If you have unpaid credit on your tab, lenders are likely to reject your mortgage application. Having no credit on your tab at all is also a disadvantage lest you think otherwise. When you show a credit history on car loans, credit card etc, it shows you as a responsible person capable of paying back your loans. Finally, when applying for a mortgage, having a good credit score is important, but also note that if your score is lower than 680 it does not mean you will not qualify for the loan. The only downside is that top lenders and lower mortgage rates may be off limits because of a lower score. But you can always work on improving your score for more favourable conditions. If you are a borrower having any doubts or questions about credit score or anything related to mortgages, do not hesitate to contact LendX Financial in Brampton, Greater Toronto Area.
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