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How Your Loans and Spending Habits Are Quietly Shaping Your Credit Score

Fri, 10 Apr 2026 19:51:47 GMT

Your credit score is one of the most important numbers in your financial life — especially when it comes to getting a mortgage. But for most Canadians, how that number actually gets calculated remains a bit of a mystery.

Here's what you need to know.

What Is a Credit Score, Exactly?

A credit score in Canada ranges between 300 and 900 points. It's considered a predictor of how likely you are to pay your debt on time, and it directly affects a lender's decisions on loans, interest rates, and credit limits. The higher your score, the better.

In Canada, Equifax and TransUnion are the two primary organizations that collect data on consumer borrowing and provide credit scores to lenders. While both use similar inputs, their algorithms can differ — which is why your score may vary slightly depending on which bureau a lender checks.

Not All Loans Are Created Equal

You might assume that carrying a mortgage, a car loan, and a credit card all affect your score the same way. They don't.

Revolving credit products — like credit cards or a line of credit — can carry a higher influence on your credit score because they provide more insight into how you manage credit on a day-to-day basis. If you're regularly carrying a high balance or missing payments, that gets noticed quickly.

Instalment loans, such as auto loans, personal loans, or student loans, show your ability to manage a fixed scheduled payment. A mortgage, on the other hand, demonstrates your capacity to manage long-term balance repayment. Each type of credit tells lenders something different about your financial behaviour.

The Factors That Matter Most

Here's a breakdown of what actually moves your credit score:

1. Payment History

The biggest impact on your credit score comes from payment history — whether you're paying on time, and how long any bills have gone unpaid. Even one missed payment can leave a mark.

2. Total Amount Owed

This includes the total you owe across all creditors, how much you owe on specific types of accounts, and how much of your available credit you've used.

3. Credit Utilization

Your debt-to-credit utilization ratio — the amount you're borrowing compared to your total credit limit — matters significantly. Keeping that ratio below 30 to 40 per cent will help your score.

4. Length of Credit History

How long you've had credit products plays a role in your score calculation. This includes the age of your oldest account, your newest account, and the average age of all accounts. Closing old accounts can unintentionally lower your score.

5. Credit Inquiries

A credit inquiry for a new credit card or auto loan stays on your profile for six years. Checking your own score or getting a pre-approval doesn't affect your score — and when shopping for a mortgage, multiple inquiries are typically treated as a single event.

6. Unused Credit

Having a large amount of unused credit available can also negatively affect your score. Even if you don't owe anything on a $50,000 line of credit, a lender still has to factor in the fact that you have the capacity to take on that debt.

What This Means Before You Apply for a Mortgage

Your credit score doesn't just determine whether you're approved — it directly impacts the interest rate you're offered. A stronger score can mean thousands of dollars in savings over the life of your mortgage.

If you're planning to buy, renew, or refinance, it's worth taking a close look at your credit picture well in advance. Small changes — like paying down a credit card balance or avoiding new credit applications — can make a real difference in where your score lands when it counts.

Not sure where to start? Reach out — reviewing your financial profile before you apply is part of how we help you get the best possible outcome.

Have questions about your mortgage options? Get in touch today.

What is Mortgage Fraud?

Thu, 19 Mar 2020 02:21:03 GMT

Have you ever wondered about how to protect yourself from mortgage fraud? Although the chances of you becoming a victim of mortgage fraud is relatively small, if you do become a victim, it will certainly have a long lasting negative impact on your life. So best to be aware of the warning signs. So here's some information from the Government of Canada provided through the Canadian Mortgage and Housing Corporation that outlines mortgage fraud, and what you can do to protect yourself.

How to Protect Yourself When Purchasing or Refinancing a Home

Beware of promises of "easy money" in real estate. Consumers who knowingly misrepresent information when buying or refinancing a home are committing mortgage fraud.

What is Mortgage Fraud?

Mortgage fraud occurs when someone deliberately misrepresents information to obtain mortgage financing that would not have been granted if the truth had been known. This can include:

Misstating your position or inflating your income or length of service at your job.
Stating you are a salaried/full time employee when you are a contract, part time, hourly or commission-based employee or are self-employed.
Misrepresenting the amount and/or source of your down payment.
Purchasing a rental property and misrepresenting it as owner-occupied.
Not disclosing existing mortgage and/or debt obligations.
Misrepresenting property details or omitting information in order to inflate the property value.
Adding co-borrowers who will not be residing in the home and do not intend to take responsibility for the mortgage.
Another common form of fraud is when a con artist convinces someone with good credit to act as a "straw buyer".

A straw buyer is someone who agrees to put his or her name on a mortgage application on behalf of another person. In return for their participation, straw buyers may be offered cash or promised high returns when the property is sold. Often, straw buyers are deceived into believing they will not be responsible for the mortgage payments.

Consequences of Misrepresentation

Borrowers who misrepresent information and straw buyers who allow a property to be purchased in their name are committing mortgage fraud and will be liable for any financial shortfall in the event of default. They may also be held criminally responsible for their misrepresentation.

What Can You Do to Protect Yourself?

To protect yourself and your family from becoming victims of, or accomplices to mortgage fraud, be an informed consumer. This means:

Never deliberately misrepresent information when applying for a mortgage.
Never accept money, guarantee a loan or add your name to a mortgage unless you fully intend to purchase the property. If you allow your personal information to be used for a mortgage, even for a brief period, you could be held responsible for the entire debt even after the property is sold.
Always know who you are doing business with. Use licensed or accredited mortgage and real estate professionals.
Never sign legal documents without reading them thoroughly and being sure you understand them. If uncertain, obtain a second legal opinion or, if necessary, the services of a translator.
Get independent legal advice from your own lawyer / notary. Talk to your lawyer / notary about title insurance and other alternative methods of protection.
Your lawyer will advise you if anyone other than the seller has a financial interest in the home or if there are any outstanding liens or tax arrears.
Contact the local provincial Land Titles Office to obtain the sales history of any property you are thinking about buying, and consider having it inspected and appraised. An accredited appraiser will provide the property sales and MLS history.
If a deposit is required, make sure the funds are payable to and held "in trust" by the vendor's realty company or a lawyer / notary.
Be wary of anyone who approaches you with an offer to make "easy money" in real estate. Remember: if a deal sounds too good to be true, it probably is.

There are also simple steps you can take to protect yourself from another common form of fraud: identity theft. These include:

Never give out your personal information until you know who you are dealing with and how your information will be used. This includes requests for information in person, by mail, or over the phone or Internet.
Never reply to e-mails or phone calls that ask for your banking information, credit card details, passwords or other personal or sensitive information, particularly if you did not initiate the exchange.
Review your mail, bank statements and other financial statements on a regular basis to look for any inconsistencies. If you do not receive a bill on time, follow up with your creditors or service providers. You may also wish to contact your local Postal Outlet to ensure your mail has not been held or re-routed.
Shred or destroy all personal and financial documents before you throw them away.
Obtain and verify your credit report at least annually by contacting Canada's two credit-reporting agencies: Equifax Canada at www.equifax.ca and TransUnion Canada at www.transunion.ca.

Reporting Fraud

If you suspect that you or someone you know has been the victim of mortgage fraud, please contact your local police department or The Canadian Anti-Fraud Centre.

On-line: www.antifraudcentre-centreantifraude.ca

Toll Free: 1-888-495-8501

Toll Free Fax: 1-888-654-9426

To find out more about mortgage fraud, visit the fraud prevention section of the Canadian Association of Accredited Mortgage Professionals (CAAMP) website at http://mortgageconsumer.org/protect-yourself-from-real-estate-fraud.

Fraud Brochure_2 2

This article was originally published on the CMHC website here.

Understanding Mortgage Qualification

Thu, 19 Mar 2020 02:12:27 GMT

For the first time home buyer, it's no secret that the mortgage process might seem a little daunting! Buying your first home is a huge decision, and when things "come together", they do so quickly. In order to be as prepared as possible, it's good to have a foundational understanding of mortgage qualification. But don't worry, I will walk through this with you every step of the way. If you ever need anything, contact me anytime!

This is the introduction post to a short series that explores a lender’s decision making process that ultimately leads to your mortgage being approved or declined. Here are some of the topics we will cover in more depth in the coming weeks...

Understanding Income
Understanding Credit
Understanding Downpayment
Understanding Property

General Understanding

Although sometimes it may seem like it, let me assure you that it is not your fundamental right as a Canadian to borrow money. In fact, borrowing money for a mortgage in Canada is becoming increasingly difficult. Over the last 5 years, the government has tightened up lending guidelines 4 times and lenders seem to be looking at every mortgage application with a magnifying glass. Most recently OSFI, the government regulator came out and said that they expect a higher level of scrutiny on all mortgage applications.

Ultimately, its the lender who decides if they are comfortable with lending you money, and each lender has their own level of risk tolerance when assessing a mortgage application. Convincing the lender that you are a "good risk" is part of what a mortgage broker does for you!

There are four main areas common to every lender for their assessment. I will outline them for you now, and then follow up with an in depth look at each section over the coming weeks.

Understanding Income

Firstly, you’re looking to borrow money, are you able to pay it back? The lender wants to be assured that you have the ability to repay the money they lend you with interest. So they will ask for documents to support your income, and if they aren’t satisfied with what they get, they will ask for more.

Lenders look at the following:

Employment type – are you employed full time, part time, working seasonally, or collecting a pension?

Employment status – are you a permanent employee, have you passed your probationary period, are you on maternity leave or are you working term contracts?

Tenure – how long have you been employed in your current position, and how long have you been working in that industry?

Income type – are you self-employed, or do you have a guaranteed income, are you using bonus or overtime income, if so, how long have you been making that income?

And the list goes on and on. Obviously the more stable your job is, the longer you have been there, the more qualified you are to do your job, the better. How the lender assesses your income is probably the biggest factor in determining if they will lend you money.

Understanding Credit

Once the lender believes you have the ability to repay the loan, they will have a look at your track record of repaying previous loans. If you can’t make the minimum payments on your $1000 limit Mastercard on time what confidence are you giving the lender that you will make your mortgage payments on time?

In Canada there are 2 main credit reporting agencies, Equifax and Transunion. Typically Transunion is used by consumers to monitor their credit scores personally to protect against identity theft, while Equifax is used by lenders to determine credit worthiness.

Every time you have borrowed money from a financial institution, a history of that loan has been recorded on your permanent credit report. Your credit report is updated regularly as you either make or fail to make payments on your outstanding debts. All of the information including payment history, amount owed, length of credit history, types of credit and new credit is assessed and a credit score is generated.

Lenders look at both your credit score and the history on your credit report when deciding if you are a good risk to give a mortgage.

Understanding Downpayment

Okay, so the lender is satisfied with your income verification and you have a demonstrated history of solid loan repayment through your credit score… now, how much skin do you have in the game?

In order to lend you money for a mortgage, the lender is going to want to see that you have some money saved up for a downpayment. In Canada, the minimum downpayment you are required to come up with is 5%, meaning that the most a lender will offer you on a mortgage is 95% of the total purchase price.

Obviously the more money you apply as a downpayment, the stronger your mortgage application will be. At 20% downpayment, you are able to avoid paying mortgage insurance premiums and take out what is called a conventional mortgage.

In addition to your downpayment, you will also have to prove that you can afford to cover the legal costs in closing your mortgage, you know… paying your lawyer, paying for the registration at land titles, and lots of other small things. Typically this amounts to 1.5% of purchase price, but it can be higher depending on what province you live in.

Understanding Property

This is the wildcard of the bunch. Even if you are the best applicant in the world, you’ve been at your incredible job for 26 years, you have an impeccable credit history, and an enormous downpayment… if the property you are trying to purchase is garbage, you’re not getting a mortgage. Period.

The property is the collateral the lender holds in case you default on your mortgage. Lenders only lend on solid properties.

This means the lender will make every effort to ensure the property they are lending on is without defect. They only lend on properties they consider “prime and marketable”. The best way to look at it is, if you default on your mortgage, and the lender has to repossess the property, how easy would it be for them to sell it and get their money back? And abnormalities make properties less marketable.

So if you are looking on MLS and you find a 600 sq ft, mouldy non-remediated grow op, “handyman special” that has been sitting on the market for 2 years with a basement that is crumbling in on itself (without an engineer’s report), chances are you should just keep looking, no one is going to lend you money on this.

In Summary

As plainly as I can put it, the biggest problem you will face in applying for a mortgage is the potential disconnect between your belief that you are credit-income-asset-worthy to borrow money, in your own mind minimizing your flaws, compared to the lender’s scrutiny of your income-credit-asset worthiness, seemingly making a huge deal out of insignificant issues.

You might want to read that last sentence again.

If you go into the bank, the banker has the bank’s best interest in mind, they work for the bank, paid by the bank, to limit the risk to the bank while making money for the bank. In no way do they work or represent you. On the other hand, when you work with me, I work for you, with your best interest in mind. I present your application to a lender or several lenders in a way that highlights your strengths and explains any shortcomings. I use my knowledge, experience and relationships to advocate on your behalf making sure to put forward a clear and concise mortgage application ensuring the best chance for an approval. As an added bonus, my services are free to you.

Over the next couple of weeks and months I will be digging in a little deeper on each of these points and sharing more about how a lender looks at your mortgage application. Keep an eye out!

If you have any questions about this, or would like to sit down and discuss applying for a mortgage, please feel free to contact me anytime! I would love to talk with you.

Minimum Required Credit Profile

Thu, 19 Mar 2020 02:00:05 GMT

Credit. The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. When you borrow money to buy a house, you will be required to prove that you have a good history of managing your credit. But what exactly is a "good history of managing credit"? What are lenders looking at when they assess your credit report?

An easy way to remember the minimum requirements for credit is the 2/2/2 rule. 2 active trade lines for a minimum of 2 years, with a minimum of a $2000 limit.

Two active trade lines. You receive a trade line on your credit report anytime a lender extends you credit. This could be a credit card, an instalment loan, or a line of credit. Your repayment history is kept on your credit report. In order for a tradeline to be considered active, you must use it at least once every three months.

Two years. Both your trade lines have to be established for at least two years. This gives the lender confidence that you have established your credit over a decent period of time.

Two thousand dollars. This is the bare minimum limit required on your trade lines. So if you have a credit card with a $1000 limit and a line of credit with a $2500 limit, you would be okay as your limit would be $3500. Sometimes people confuse the limit with the balance. You don't have to carry a balance on your trade lines for them to be considered active. In fact, it's best if you use your trade lines, but pay them off in full every month.

A great way to use your credit is to pay your bills via direct withdrawal from your credit card, then setup a regular transfer from your bank account to pay off the credit card in full. Automation becomes your best friend. Just make sure you check that everything is working as it should every once and awhile.

Now, although this all may seem pretty straightforward, there are a lot of situations where people assume they will qualify with a minimum required credit profile, when in fact they don't. It could be a simple fix, or it could require a lot of time. So, if you are thinking about buying a house in the next couple of years, and want to make sure that your credit profile will be established by the time you are ready to shop, please contact me and we can work through your mortgage application.

Avoid This Mistake When Shopping for a House

Thu, 19 Mar 2020 01:57:56 GMT

No doubt about it, buying a home is an emotional experience.

It's a game of balancing needs and wants, while trying to be honest with yourself about those very needs and wants. It's hard to get it right, figuring out what's negotiable and what isn't... what you can live with and what you can't live without. House shopping tends to be more arbitrary than science, especially when you're someone who makes decisions with your heart (sometimes at the expense of your head).

One of the biggest mistakes you can make when shopping for a house is to fall in love with something you can't afford. Doing this almost certainly guarantees that nothing else will compare and you will inevitably find yourself "settling" for something that is actually quite nice (and would've been perfect, had you not already fallen in love with something out of your price range).

Now, there is nothing wrong with dreaming, and taking a tour of new show homes to snap a few pictures to get some inspiration, but when it comes to the nitty gritty of buying a home, you should know exactly what you can qualify for, so that you can shop with confidence. You need a mortgage pre-approval.

A pre-approval does a few things...

It will outline your buying power. You will be able to shop with confidence knowing exactly how much you can spend.
It will uncover any issues that might arise in qualifying for a mortgage (example mistakes on your credit bureau).
It will outline necessary supporting documentation so you can get those together ahead of time.
It will secure a rate for 30 to 120 days depending on your mortgage product.
It will save your heart from the pain of falling in love with something you can't afford.

Don't make the mistake of falling in love with something you can't afford, get a pre-approval before you start shopping, your heart will thank you.

If you want to talk with me about your financial situation and nail down exactly what you can actually afford, please don't hesitate to contact me anytime. This is what I do, and I'd love to work with you!

Mortgages - So Much More Than Just the Lowest Rate!

Thu, 19 Mar 2020 01:52:26 GMT

There aren't too many Canadians who are able to save up enough money to pay cash for their home. This is why we have mortgages. A mortgage is a loan made to assist a borrower to purchase a property. The property is held as collateral and interest is charged on the loan. Typically a mortgage will be paid back over 25 years (this is called the amortization), and the amount of interest charged is renegotiated every 1-10 years (this is called the term). Over the long run, borrowing money isn't cheap, despite interest rates being at an all time low!

So, if you need to borrow money in order to buy a property, your number one goal should be to keep your cost of borrowing as low as possible. Bolded and italicized for emphasis. Now, contrary to what years of marketing messaging would have us believe, this doesn't always mean choosing the mortgage with the lowest rate. Although choosing a mortgage with a low rate is a part of lowering your borrowing costs, it's not the only factor.

When looking to lower the overall cost of borrowing throughout the life of your mortgage, there are many factors that should be considered. Here are some of them.

How long do you anticipate living in the property? This could help you decide an appropriate term.
Do you plan on moving for work, do you need flexibility down the road with your mortgage?
What does the prepayment penalty look like if you have to break your term? This is probably the biggest factor in lowering your overall cost of borrowing.
How is the lender's interest rate differential calculated, what figures do they use?
What are the prepayment privileges?
Can you make lump sum payments, or increase your monthly payments, and how is the interest recalculated when you do pay extra?
Is the mortgage a collateral charge? This could mean you won't be able to switch the mortgage upon renewal to another lender without incurring new legal costs.
Should you consider a fixed rate, variable rate, HELOC, or a reverse mortgage?
What is the size of your downpayment? Coming up with more money down might lower (or eliminate) mortgage insurance premiums.

What you will often find is that mortgages with the rock bottom, lowest rates, can have potential hidden costs built in to the mortgage terms that will cost you a lot of money down the road. The difference between 2.59% and 2.69% could save you a few bucks a month, while taking a longer fixed rate term and having to break the mortgage halfway through the term could potentially cost you thousands (tens of thousands). And this is really bad for your overall cost of borrowing.

As a mortgage consumer who will potentially buy a handful of houses in their life, your best bet is to work with an independent mortgage professional who has your best interest in mind and knows exactly how to keep your cost of borrowing as low as possible. A mortgage is so much more than just a low rate, it's really about the fine print.

If you would like to talk more about your financial situation or figure out a plan so you can plan ahead for your mortgage, please contact me anytime!

How to Not Qualify for a Mortgage

Thu, 19 Mar 2020 01:52:03 GMT

If you have no desire at all to qualify for a mortgage, here are some great ways to make sure you don't accidentally end up buying a house and taking out a mortgage to do so.

One of the best ways to ensure you won't qualify for a mortgage is to be unemployed . Yep, banks hate lending money to unemployed people! Okay, so you have a job. Well, that's okay, you can always unexpectedly quit your job just as you are trying to arrange financing! Even if you are making a lateral move, or taking a better job than the one you have now, that's cool... any change in employment status while you are looking to get a mortgage will most likely wreck your chances of getting a mortgage for a while. This is because lenders want to see stability; they want to know that you have been in your current position for some time, that you are past probation, and that everything is working out well. By changing jobs right when you are looking to buy a property, you won't instill the lender with confidence, and they probably won't give you a mortgage. Mission accomplished.

Don't wanna buy a house? Well, then it's best you don't save any money. Better yet, you should probably borrow as much money on credit as you can. One of the main qualification points on a mortgage is called your debt-service ratio. Simply put, the more money you owe in consumer debt, the less money you will qualify to borrow on a mortgage, because your ratio of income compared to your debt is higher when you owe more money. Consider this permission to go and finance a Harley-Davidson. Do it, right now. Not a big fan of motorcycles? That's cool; a Ford 150 should do the trick nicely. The key here is to make sure you add as much monthly payment as you can. The bigger the payment, the better.

But let's say that unfortunately your debt-service ratios are in line, you have been able to save up the necessary 5% down payment, and you are on your way to buying a house. What do you do? Ugly documentation! A great way to make sure your lender feels uncomfortable is to have really terrible bank statements. Typically when proving your down payment, the lender will require 90 days’ history of your account(s), with your name on the statement, showing that you have accumulated the down payment over time. Want to really mess things up? Make sure there are lots of deposits over $1000 that can't be substantiated. This will look like money laundering. If that doesn't work, you can always black out your "personal information." Just use a black Sharpie and make your bank statements look like a classified FBI document. Lenders hate that!

So you've got a great job and lots of money… don't panic, you can still absolutely wreck your chances of qualifying for a mortgage. Just don't pay any of your bills on time. Seriously, borrow lots of money, and then stop paying! Boom. Why would any lender want to lend you money when you have a great track record of not paying back any of the money you borrow? Now, if this feels morally wrong, okay, here is an ethical way to wreck your credit. Don't pay that cell phone bill out of principle. We've all been there — roaming charges, extra data charges that the cell company added on your bill… choose not to pay this on principle. This is a great way to sink your chances of getting a mortgage, I mean, how are you supposed to know that some collections (like cell phones) will show up on your credit report?

Last, if you want to make sure you never get financing, insist on buying the worst house in a bad neighbourhood. You see, the property you are looking to buy is very important to the lender. If they lend you the money to buy it and you stop making the payments, they will be forced to repossess and sell it. They are going to make sure they can recoup their initial investment. So, a "handyman special, fixer upper, with lots of potential" is a great option. As everyone knows, those words are code for "a giant dump." Bonus points if you get those terms written in the MLS listing. Yep, insist on buying something that is falling apart and stick to it; don't ever consider buying a solid home in a good neighbourhood.

a shot of a run-down house on a hill

So there you have it, if you don't want a mortgage, no problem. Quit your job, borrow lots of money, wreck your credit, and insist on buying a dump.

However, on the off chance you feel homeownership is right for you, contact me anytime, I can help you put a plan in place to avoid these (and many more) mortgage qualification pitfalls.