What is a Good Credit Score in Canada for Getting a Mortgage
What is a Good Credit Score in Canada for Getting a Mortgage (and How to Build One Before You Buy a Home)
Your credit score is one of the most important numbers you'll need when applying for a mortgage in Canada. It can mean the difference between securing a competitive interest rate and paying thousands more over the life of your loan—or worse, being turned down entirely.
If you're planning to buy a home in Nova Scotia or anywhere in Canada, understanding what constitutes a "good" credit score and how to improve yours before you apply can save you significant money and stress. FREE Mortgage Calculator
What is a Credit Score in Canada?
In Canada, credit scores range from 300 to 900. This three-digit number serves as a snapshot of your creditworthiness—essentially, how reliable you are as a borrower based on your past financial behavior. Check out our article about why your credit score matters more than you think.
Lenders use your credit score as a risk assessment tool. The higher your score, the less risky you appear, which translates to better loan terms and easier approvals. Your score is calculated by Canada's two major credit bureaus, Equifax and TransUnion, using information from your credit report including payment history, outstanding debts, length of credit history, and recent credit applications.
What Counts as a "Good" Credit Score for a Mortgage?
While every lender sets their own criteria, most Canadian mortgage lenders consider a score of around 660 or higher as "good" enough to qualify for standard mortgage products. However, the higher your score climbs, the more doors open:
Typical Credit Score Ranges in Canada:
| Score Range | Category | Impact on Mortgage Approval |
|---|---|---|
| 300–559 | Poor | Mortgage approval extremely difficult; very high rates if approved at all |
| 560–659 | Fair | Limited lender options; higher interest rates and stricter conditions |
| 660–724 | Good | Generally acceptable for mainstream mortgage products |
| 725–759 | Very Good | Strong approval likelihood; access to competitive rates |
| 760–900 | Excellent | Best chances for optimal rates and favorable terms |
According to FICO, the average Canadian credit score sits at approximately 760 as of late 2024—firmly in the "very good" range. This benchmark gives you a sense of where you stand relative to other borrowers across the country.
Why Your Credit Score Matters When Buying a Home
Your credit score doesn't just determine whether you'll be approved for a mortgage—it directly impacts the cost of homeownership itself.
Better Interest Rates: Even a small difference in your mortgage rate can translate to tens of thousands of dollars over a 25-year amortization. A borrower with a score in the 760+ range might qualify for rates significantly lower than someone with a 650 score, meaning lower monthly payments and less interest paid overall.
Easier Approval Process: Higher scores give you access to more lenders and mortgage products, including those with more flexible terms or features like the ability to increase payments or make lump-sum contributions without penalty.
Stronger Negotiating Position: When you have an excellent credit score, you have leverage to shop around and negotiate better terms with multiple lenders competing for your business.
Beyond the Mortgage: If you're currently renting and planning to buy in the future, remember that landlords often check credit scores during the application process. Utility companies and phone providers may also review your credit and require deposits if your score is lower. Building good credit now helps in multiple aspects of the homebuying journey.
What Affects Your Credit Score?
Understanding the factors that influence your score helps you take targeted action to improve it:
Payment History: Your track record of paying bills on time is the single most important factor. Even one missed payment can damage your score for months or years.
Credit Utilization: This is the percentage of available credit you're using. Lenders prefer to see you using well under 30% of your total credit limits. For example, if you have $10,000 in total credit limits, keeping your balances below $3,000 signals responsible management.
Length of Credit History: The longer you've successfully managed credit accounts, the better. This is why closing old credit cards can sometimes hurt your score—you're shortening your average account age.
Credit Mix: Having a variety of credit types (credit cards, car loans, lines of credit) can work in your favor, though this is a minor factor compared to payment history and utilization.
Recent Credit Inquiries: Each time you apply for new credit, a "hard inquiry" appears on your report. Too many inquiries in a short period can signal financial stress and temporarily lower your score.
Negative Items: Collections, consumer proposals, and bankruptcies can severely impact your score and remain on your credit report for years, making mortgage approval much more challenging.
How to Improve Your Score Before Applying for a Mortgage
If you're planning to buy a home in the next 6–12 months, now is the time to focus on your credit health. Here's a mortgage-focused action plan:
Pay Everything on Time, Every Time: Set up automatic payments for at least the minimum amount due on all credit accounts. Even better, pay your full balance each month to avoid interest charges entirely.
Reduce Your Credit Utilization: Make it a goal to keep your credit card balances well below 30% of your limits. If you have a $5,000 limit, aim to carry no more than $1,500—and ideally much less. Pay down existing balances before applying for a mortgage pre-approval.
Avoid New Credit Applications Before House Hunting: Every hard inquiry can temporarily ding your score. In the months leading up to your mortgage application, resist opening new credit cards, financing furniture, or buying a car on credit. Wait until after your mortgage closes.
Keep Older Accounts Open: Even if you don't use a credit card regularly, keeping it open (with the occasional small purchase to keep it active) helps maintain your credit history length and keeps your total available credit higher, which improves your utilization ratio.
Review Your Credit Reports Regularly: You can access your credit reports for free from both Equifax and TransUnion. Check them at least twice a year for errors, fraudulent accounts, or outdated negative information. Dispute any inaccuracies immediately, as correcting mistakes can provide a quick score boost.
Be Strategic About Credit Mix: If you only have credit cards, consider adding an installment loan like a small personal loan or car financing—but only if you need it and can comfortably afford the payments. Don't take on new debt just to improve your mix if it stretches your budget.
Address Collections and Negative Items: If you have accounts in collections, work with the creditors to settle them or arrange payment plans. While paid collections still appear on your report, they look better than unpaid ones and show lenders you're taking responsibility for past debts.
Interested to know the closing costs when buying a home in Nova Scotia?
Planning Your Homebuying Timeline Around Your Credit
Building or rebuilding credit takes time. If your score currently sits below 660, expect to spend at least 6–12 months working on these strategies before applying for a mortgage. If you're already in the "good" range but want to reach "very good" or "excellent" for the best rates, a few months of focused effort can make a significant difference. How to get pre-approved for a mortgage in Halifax.
For buyers in Nova Scotia's competitive real estate market, having your credit in top shape before you start house hunting gives you a critical advantage. You'll know exactly what you can afford, have confidence in your approval, and potentially save thousands on your mortgage.
The Bottom Line
A good credit score for getting a mortgage in Canada generally starts around 660, but aiming for 725 or higher puts you in a much stronger position for favorable rates and terms. With the average Canadian scoring around 760, you have a clear benchmark to work toward.
Your credit score is one of the few aspects of the homebuying process that's completely within your control. By paying bills on time, keeping balances low, and being strategic about new credit applications, you can build the strong credit profile that opens doors to homeownership—and saves you money for years to come.
If you're considering buying a home in the Halifax Regional Municipality or elsewhere in Nova Scotia and have questions about how your credit affects your mortgage options, reach out to discuss your situation. Getting pre-approved early in the process helps you understand exactly where you stand and what steps, if any, you need to take before making an offer on your dream home.
