Credit ratings and mortgages

An important part of applying for mortgage financing is a credit check and a good credit rating allows you to qualify for the best mortgage rates and get pre-approved for a loan. In our experience, it is straightforward to qualify if you meet the employment requirements and have been responsible with credit in the past. You may consider getting a copy of your credit rating before you apply in order to avoid surprises and possible delays. Because your credit report contains information about you, you have the right to inspect a copy of it. Equifax and Transunion, Canada’s largest credit bureaus, will mail you a free copy upon request but you can obtain it online for a small fee. If you think you may have issues with your credit, tell your lender up front so she can help you. Everyone wants to see your financing application approved, if possible.

Information that is included

As a routine part of the application process, your lender will order a copy of your personal credit history. This information is compiled by credit agencies, and comes from various sources, including banks, retailers and other public records. The data collected may come from past and current credit or debit cards, financial institution accounts, personal loans, mortgages, student loans, and more. Your lender will receive a report that shows the creditor’s name, your account number and the date you opened it, as well as your current balance, and a detailed payment history (for example, how many times you were late paying bills). It can also show public records information like marriages, divorces, liens, any criminal history, or bankruptcies. Generally, credit reports go back seven years.

How your credit rating is assessed

The credit reporting agency provides information on your credit history and computes a score based on your repayment history. Your lender will assess the report and determine whether or not to lend you money. If they have any concerns, you may be asked for more details. Generally, lenders work as quickly as possible when processing mortgage applications, but may be slowed down if they need to check in with you again for an explanation concerning items on your credit history. There’s no need to worry if this happens, just be prepared to answer all of the questions you’re asked—often a simple explanation will clear it up.

Other information used

Your lender will also use the report to verify other information on your mortgage application such as information about your employment status, your address and possibly rental payment history. The credit report will also indicate inquiries made by other creditors over the period of the report. This information shows your lender other avenues of financing you may have tried. Be prepared to answer all questions thoroughly and honestly.

Dispute errors in your credit report

If you disagree with something in your credit history, you have the right to challenge it and ask that the information be corrected. For example, if your report shows you were over 90 days late paying a bill, but doesn’t clarify that you withheld payment pending the settlement of a dispute with the creditor than you should ask for a note to be attached to that line item. If you’d like to dispute an issue on your credit report, contact the credit bureau directly.

To Do List

  • Check your credit rating at Equifax or TransUnion before talking with a mortgage broker

  • Correct any errors and submit reasons for delayed payments like disputes

  • Lenders will see your credit history, including notes, for the past seven years

  • Contact us for a referral to a mortgage broker if you would like to make an application or learn how to repair your credit