Everything you Need to Know About Credit
HomeHappy • February 8, 2021
Your Credit Score is more Important Than Ever
Your credit score
is an evaluation of your risk level as a borrower. In Canada, it’s a number between 300-900 that’s calculated based on the data in your credit report. Designed to give lenders insight into your capacity to manage your finances and repay a loan, your credit score determines what rates, terms, and products lenders will offer.
If you’re interested in a mortgage loan, having good credit is vital to getting a great deal.
Your score is generated by 2 main organizations: Equifax
and TransUnion, and both credit bureaus allow you free access to your data. Since your credit score can impact your ability to make big purchases, don’t get taken by surprise. The more you know about your financial standing before making a big decision like buying a house, the more prepared you’ll be.
See where you stand, ensure correct information, that there are no errors, or strange activity by ordering your credit report and score. While there are more details available, essentially you need to prove your identity with two pieces of ID and basic background information. Your detailed report will arrive by mail in two to three weeks. You can also pay for instant online access for around $24.
Follow these links for instructions on accessing your free credit report from TransUnion and Equifax.
Credit Report and Credit Score -- Are They The Same?
Your credit report contains both personal identifying information like name and address, and contains all your financial information. It details your credit history, including repayment, types of credit, and may also include public records that might affect your creditworthiness -- like bankruptcy, judgements, and liens. Lenders use it to verify who you are, see your activity, and learn about your repayment history.
Your credit score is a number calculated using the information found in your report. It determines your risk level as a borrower. The higher the number, the better the odds are that you’ll repay your debt.
Credit Score Range
In Canada, our credit range varies from 300 to 900. Your credit score is a lot like a really basic game -- you get points when you use your credit responsibly, and lose points when you struggle to manage it. Like most games, the higher your score, the better.
For example, someone with very good (725-759) or excellent (760-900) credit has a high probability of being accepted for a mortgage because it’s unlikely they will default on payments.
People with higher scores have proven they’re reliable and trustworthy borrowers and generally get better credit terms. That translates to lower payments, lower interest rates, and they pay less interest over the lifetime of their account. They’ve also built enough credibility to borrow larger amounts.
People with a credit score below 650 may struggle to get new credit, so it’s best to strive for 680 or more to remain in good standing. Good habits create better outcomes, and make it easier to stay financially fit.
If you're far from this number, don’t fret -- everyone’s financial and credit situation is different, and lenders have different criteria to assess potential borrowers. No matter your situation, we can help.
Besides, a bad score isn’t permanent. Your credit score is flexible and always changing. It’s like a game, remember? So change your strategy.
Follow our tips below to set yourself up for a mortgage that suits you.
Be Consistent, and Improve Your Credit Score
Here are 7 easy ways to get you back on track, and build great credit.
- Create a realistic budget that works for you, and incorporates your debt. Include some fun money so you are more likely to stick to your plan.
- Pay your bills on time. If this is a struggle, set payment reminders or schedule automatic payments so the money automatically goes where it needs to. Late payments lower your score, and timely payment is huge when determining your credit score.
- If possible, pay off your credit card by the monthly due date. If you can’t pay in full, always pay the minimum amount shown on your statement.
- Never exceed your credit card limits. Use your card responsibly, and keep your balance well below the limit by spreading your spending. The higher your balance, the more impact it has on your credit score.
- Don’t apply for too much credit at once. The more applications you make, the more a lender checks your credit report. Hard inquiries stack and damage your score. Plus, the credit bureaus can see multiple applications as a sign of financial trouble.
- Don’t close unused credit cards. While cancelling a card seems like a great way to prevent yourself from debt you can’t afford, a healthy credit score requires a long history of responsible usage. When you cancel a card, you wipe the history. Besides, a low interest card with a zero balance and only periodic usage can really help build credit.
- Regularly check your credit report for any errors, and see how you’re doing.
There’s no shortcuts in the game of life, and it can take 3-6 months for the changes you make to reflect in your score. It takes time, patience, and consistency to rebuild credit.
Start now, and let your future self reap the benefits. You’ll thank yourself later.
What is Good Credit?
Well, it means your credit score is 650+, you can borrow and pay back on time, you’re trusted with large sums of money, and you have financial freedom to make bigger purchases.
Why it Matters
Having a high score provides you with better opportunities and more choices.
Good credit is a major deciding factor on whether you’re approved for a new credit product, and sets the terms and rates. A great score saves you money. Period.
Not only through making better financial choices for yourself, but because you do so, lenders want your business and are typically willing to give you a better deal too.
A good credit score shows lenders you’re reliable and trustworthy. It proves to lenders that you’re a great candidate for a loan or line of credit.
Ultimately, it means you're creditworthy.
How is Your Credit Score Calculated?
There are 5 financial factors pulled from your credit history that determine your score. Each element plays a significant role, though they are weighted differently which changes how they influence your score. Let’s deep dive into the specifics.
Payment History (35%)
Your payment history is 35% of your credit score -- the largest contributing factor. Lenders want to know they will get the money back that you borrowed. When you pay your bills, whether or not you’re on time matters. Your creditors report how much you owe, your monthly payment, and when you pay. A negative credit past will do some damage, and if you have a positive, clean history, it’s likely you have a great credit score to reflect that. The longer you have credit reporting to the credit bureau without late payments, the higher your score climbs.
Debt Owed (30%)
Your credit utilization, and how reliant you are on non-cash funds plays a major role in calculating your credit score. Your current financial obligations determine if you can manage more debt. People with a lot of debt have lower scores. Owing debt also means racking up interest charges, so paying off debt both increases your score, and saves you money.
Pro tip: A great credit score involves keeping the balance on your cards below 30% of the limit. It’s better to spend your spending over several cards, than have one card nearly maxed.
Credit Account History (15%)
How long you’ve been a borrower matters because it can provide a more accurate view of how you operate. It means you’ve had time to establish your reliability and trustworthiness. Someone who’s used credit over a long period of time is seen as a less risky prospect than someone just starting out. That’s why it’s never too early to start building your credit, and it’s a good idea to keep old accounts open. Even with a zero balance, and minimal usage, an old account is great for your overall credit health.
New Credit (15%)
Whenever you apply for a new loan or credit product, a lender does a hard inquiry into your credit report which drops your credit score for several months. Unfortunately, this effect stacks. If you apply to too many new credit cards or loans all at once, your score could significantly drop. Multiple credit applications can signal financial trouble, and red flag you as a risky borrower.
Types of Credit (10%)
Your credit mix plays a small role, and looks at how many cards, loans, or lines of credit you have. Diversity matters, and having a different mix of credit can help build your score. Certain credit types are more beneficial for you. For example, a credit card from a major, traditional financial institution is way better than a store credit card.
Your Choices Matter, Spend Smart.
Bad spending habits, and swiping without a care can have you quickly drowning in debt. Every transaction counts, no matter how small the purchase seems. Little things can sneak up on us, and they stack fast.
Sometimes we forget a credit card isn’t free money. Then we make irresponsible choices because it’s easy not to consider the consequences. Especially in the moment.
When you signed the dotted line and accepted your credit, you agreed to pay your lender back, and on time. That’s why missing payments damages your credit score -- you aren’t keeping your word.
Be smart with credit. Maybe you don’t see it right now, but every choice you make affects you. It hits harder than expected if you haven’t been paying attention.
Order your credit report to see where you stand. Ensure there are no errors.
If you’re ignoring your debt or not monitoring spending, it’s time to make changes. Make a debt repayment plan. Pay off as much as you can. If necessary, talk to us about consolidating. Credit Counselling and debt management programs can make buying your own home near impossible, so it’s better to talk to someone who has your long term interests at heart.
Make a realistic budget and know what you can spend. Set yourself up for success, with a plan that suits your needs. Give yourself the freedom of security and financial peace of mind.
Protect What You’ve Built
If you’re worried about the health of your credit beyond our tips to improve and manage it, you may want to consider a credit monitoring service. Both Equifax and TransUnion offer that option so you can stay on top of your credit and spot any fraudulent accounts and charges.
Talk to us
about any concerns you have, or if you have any questions. We’re always happy to offer customized solutions and advice that suit your unique needs.
Share:
Recent Posts
So, you’re thinking about buying a home. You’ve got Pinterest boards full of kitchen inspo, you’re casually scrolling listings at midnight, and your friends are talking about interest rates like they’re the weather. But before you dive headfirst into house hunting— wait . Let’s talk about what “ready” really means when it comes to one of the biggest purchases of your life. Because being ready to own a home is about way more than just having a down payment (although that’s part of it). Here are the real signs you're ready—or not quite yet—to take the plunge into homeownership: 1. You're Financially Stable (and Not Just on Payday) Homeownership isn’t a one-time cost. Sure, there’s the down payment, but don’t forget about: Closing costs Property taxes Maintenance & repairs Insurance Monthly mortgage payments If your budget is stretched thin every month or you don’t have an emergency fund, pressing pause might be smart. Owning a home can be more expensive than renting in the short term—and those unexpected costs will show up. 2. You’ve Got a Steady Income and Job Security Lenders like to see consistency. That doesn’t mean you need to be at the same job forever—but a reliable, documented income (ideally for at least 2 years) goes a long way in qualifying for a mortgage. Thinking of switching jobs or going self-employed? That might affect your eligibility, so timing is everything. 3. You Know Your Credit Score—and You’ve Worked On It Your credit score tells lenders how risky (or trustworthy) you are. A higher score opens more doors (literally), while a lower score may mean higher rates—or a declined application. Pro tip: Pull your credit report before applying. Fix errors, pay down balances, and avoid taking on new debt if you’re planning to buy soon. 4. You’re Ready to Stay Put (At Least for a Bit) Buying a home isn’t just a financial decision—it’s a lifestyle one. If you’re still figuring out your long-term plans, buying might not make sense just yet. Generally, staying in your home for at least 3–5 years helps balance the upfront costs and gives your investment time to grow. If you’re more of a “see where life takes me” person right now, that’s totally fine—renting can offer the flexibility you need. 5. You’re Not Just Buying Because Everyone Else Is This one’s big. You’re not behind. You’re not failing. And buying a home just because it seems like the “adult” thing to do is a fast way to end up with buyer’s remorse. Are you buying because it fits your goals? Because you’re ready to settle, invest in your future, and take care of a space that’s all yours? If the answer is yes—you’re in the right headspace. So… Are You Ready? If you’re nodding along to most of these, amazing! You might be more ready than you think. If you’re realizing there are a few things to get in order, that’s okay too. It’s way better to prepare well than to rush into something you're not ready for. Wherever you’re at, I’d love to help you take the next step—whether that’s getting pre-approved, making a plan, or just asking questions without pressure. Let’s make sure your homebuying journey starts strong. Connect anytime—I’m here when you’re ready.
Bank of Canada maintains policy rate at 2¼%. FOR IMMEDIATE RELEASE Media Relations Ottawa, Ontario January 28, 2026 The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. The outlook for the global and Canadian economies is little changed relative to the projection in the October Monetary Policy Report (MPR). However, the outlook is vulnerable to unpredictable US trade policies and geopolitical risks. Economic growth in the United States continues to outpace expectations and is projected to remain solid, driven by AI-related investment and consumer spending. Tariffs are pushing up US inflation, although their effect is expected to fade gradually later this year. In the euro area, growth has been supported by activity in service sectors and will get additional support from fiscal policy. China’s GDP growth is expected to slow gradually, as weakening domestic demand offsets strength in exports. Overall, the Bank expects global growth to average about 3% over the projection horizon. Global financial conditions have remained accommodative overall. Recent weakness in the US dollar has pushed the Canadian dollar above 72 cents, roughly where it had been since the October MPR. Oil prices have been fluctuating in response to geopolitical events and, going forward, are assumed to be slightly below the levels in the October report. US trade restrictions and uncertainty continue to disrupt growth in Canada. After a strong third quarter, GDP growth in the fourth quarter likely stalled. Exports continue to be buffeted by US tariffs, while domestic demand appears to be picking up. Employment has risen in recent months. Still, the unemployment rate remains elevated at 6.8% and relatively few businesses say they plan to hire more workers. Economic growth is projected to be modest in the near term as population growth slows and Canada adjusts to US protectionism. In the projection, consumer spending holds up and business investment strengthens gradually, with fiscal policy providing some support. The Bank projects growth of 1.1% in 2026 and 1.5% in 2027, broadly in line with the October projection. A key source of uncertainty is the upcoming review of the Canada-US-Mexico Agreement. CPI inflation picked up in December to 2.4%, boosted by base-year effects linked to last winter’s GST/HST holiday. Excluding the effect of changes in taxes, inflation has been slowing since September. The Bank’s preferred measures of core inflation have eased from 3% in October to around 2½% in December. Inflation was 2.1% in 2025 and the Bank expects inflation to stay close to the 2% target over the projection period, with trade-related cost pressures offset by excess supply. Monetary policy is focused on keeping inflation close to the 2% target while helping the economy through this period of structural adjustment. Governing Council judges the current policy rate remains appropriate, conditional on the economy evolving broadly in line with the outlook we published today. However, uncertainty is heightened and we are monitoring risks closely. If the outlook changes, we are prepared to respond. The Bank is committed to ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. Information note The next scheduled date for announcing the overnight rate target is March 18, 2026. The Bank’s next MPR will be released on April 29, 2026. Read the January 28th, 2026 Monetary Report
Thinking of Calling Your Bank for a Mortgage? Read This First. If you're buying a home or renewing your mortgage, your first instinct might be to call your bank. It's familiar. It's easy. But it might also cost you more than you realize—in money, flexibility, and long-term satisfaction. Before you sign anything, here are four things your bank won’t tell you—and four reasons why working with an independent mortgage professional is the smarter move. 1. Your Bank Offers Limited Mortgage Options Banks can only offer what they sell. So if your financial situation doesn’t fit neatly into their guidelines—or if you’re looking for competitive terms—you might be out of luck. Working with a mortgage broker? You get access to mortgage products from hundreds of lenders : major banks, credit unions, monoline lenders, alternative lenders, B lenders, and even private funds. That means more options, more flexibility, and a much better chance of finding a mortgage that fits you. 2. Bank Reps Are Salespeople—Not Mortgage Strategists Let’s be honest: most bank mortgage reps are trained to sell their employer’s products—not to analyze your financial goals or tailor a long-term mortgage plan. Their job is to generate revenue for the bank. Independent mortgage professionals are different. We’re not tied to one lender—we’re tied to you. Our job is to shop around, negotiate on your behalf, and recommend the mortgage that offers the best balance of rate, terms, and flexibility. And yes, we get paid by the lender—but only after we find you a mortgage that works for your situation. That creates a win-win-win: you get the best deal, we earn our fee, and the lender earns your business. 3. Banks Don’t Lead with Their Best Rate It’s true. Banks often reserve their best rates for those who ask for them—or threaten to walk. And guess what? Most people don’t. Over 50% of Canadians accept the first renewal offer they get by mail. No questions asked. That’s exactly what the banks count on. Mortgage professionals don’t play that game. We start by finding lenders offering competitive rates upfront, and we handle the negotiations for you. There’s no guesswork, no pressure, and no settling for less than you deserve. 4. Bank Mortgages Are Often More Restrictive Than You Think Not all mortgages are created equal. Some come with hidden traps—especially around penalties. Ever heard of a sky-high prepayment charge when someone breaks their mortgage early? That’s often due to something called an Interest Rate Differential (IRD) —and big banks are notorious for using the harshest IRD calculations. When we help you choose a mortgage, we don’t just focus on the interest rate. We look at the whole picture, including: Prepayment privileges Penalty calculations Portability Future flexibility That way, if your life changes, your mortgage won’t become a financial anchor. A Quick Recap What your bank typically offers: Only their own limited mortgage products Sales-focused representatives, not mortgage strategists Default rates that aren’t usually their best Restrictive contracts with high penalties What an independent mortgage professional delivers: Access to over 200 lenders and customized mortgage solutions Personalized advice and long-term financial strategy Competitive rates and terms upfront Transparent, flexible mortgage options designed around your needs Let’s Talk Before You Sign Your mortgage is likely the biggest financial commitment you’ll ever make. So why settle for a one-size-fits-all solution? If you're buying, refinancing, or renewing, I’d love to help you explore your options, explain the fine print, and find a mortgage that truly works for you. Let’s start with a conversation—no pressure, just good advice.
