Whether you are a First Time Buyer or looking for a Mortgage Refinance, you need to know about Credit Scoring

Matt Chan • September 5, 2012

Know and Understand Credit Scoring can save you thousands

As a mortgage professional, I look at a lot of applications and credit bureaus for both first time home buyers and for mortgage refinance applicants.  I am often surprised by how unaware we are of our credit scores.  Perhaps Credit Scoring should be part of the education we get in schools.  I really believe that it should be part of a General Money Management and Finance class to educate our children how important it is to have a good credit score and to understand the consequences if they don’t.

I recently wrote a two part series article on Credit Scoring titled “Credit Scoring and Why Should You Care” that is geared specifically for first time buyers and refinance applicants.  If you want to know more about credit scoring, the articles will answer a lot of your questions.  The articles can be found here:

Part 1:

Part 2:

When you apply for a mortgage for either a purchase or refinance, banks always want to see what your credit looks like.  You should regularly check your credit score at least once a year.  There are services out there that can alert you of any major changes to your credit.  If you are interested in obtaining a copy of your credit, you can order one directly from the two main credit reporting agencies in Canada: Equifax and Transunion.

The reason why I suggest regularly checking your credit score is for the following reasons:

1) Ensure it is accurate and there are no surprises.

I remember I worked with a First Time Buyer a few years ago and when we talked about his credit bureau, we discovered a $5,000 balance on his Visa that he wasn’t aware of.  Long story short: someone had fraudulently put a charge on his card and he was not aware of it.  He did contact Visa and due to the length of time that the balance was outstanding, he had to make a settlement with them.

2) Ensure you are on track to repairing your credit

This is geared more specifically to those who are looking to repair their credit.  If you are a first time buyer and was recently turned down for a mortgage because of your credit, you need to have a plan in place to ensure that you are on track to getting your credit back on track.  This also applies if you have either recently refinanced or are looking to refinance your home.  If you recently refinanced your mortgage to consolidate your debt, you want to ensure that you are getting back on track to repairing your credit so that you are in the best possible position when your mortgage is up for renewal.  If you are looking to refinance and have been recently declined for a mortgage, you need to ensure you are on track to repairing your credit so that you are in a position to refinance in the near term.

The key here is to have a plan.  Although the exact formula for credit scoring is not public, there is enough public information out there for you to work with to ensure you can have great credit.  Start today and build on your credit with small steps.  Over time, all the little things add up.

If you have any questions, please feel free to contact me.

Good luck!

 

Matt

CONTACT

Share

RECENT POSTS

Need Funds Between Buying and Selling? Here’s How Deposit Loans & Bridge Financing Help

By Matthew Chan • November 4, 2026
You’ve outgrown your current home. It no longer fits your life, so moving makes sense. And you’re not interested in juggling two properties. Selling first and buying something new feels like the right move. Ideally, you want possession of the new home before leaving the old one. That overlap makes moving easier, reduces stress, and gives you time to paint, renovate, or settle in before the boxes arrive. But there’s a common challenge. What if the down payment for your next home is tied up in the equity of the one you’re selling? That’s where bridge financing comes in. How bridge financing works Bridge financing temporarily unlocks equity from your current home once it has a firm sale . It bridges the gap between selling your existing property and purchasing your next one, allowing you to use that equity toward your down payment. What about competitive markets? In a hot market, a strong offer often means a larger deposit . If you don’t have that cash sitting in your account, but you do have equity, a deposit loan can help you compete with confidence. The non-negotiable requirement To qualify for bridge financing or a deposit loan, your current home must have a firm, unconditional sale . No firm sale = no bridge or deposit loan. Lenders need certainty to calculate available equity and manage risk. Bottom line A firm sale is the key that unlocks bridge financing and deposit loans. If you’re planning a move and want to understand how these options could work for you, let’s talk. I’m always happy to walk you through your options and help you plan your next step with confidence.

Bank of Canada Raises Rate to 2.5% — October 28, 2026

By Matthew Chan • October 28, 2026
On October 28, 2026, the Bank of Canada raised its key interest rate by 0.25%, bringing it to 2.5%. If you have a mortgage, are shopping for a home, or have a renewal coming up, this decision matters. Here is a plain-language look at what changed, why it happened, and what it could mean for you.

How to Qualify for a Mortgage After Bankruptcy in Canada

By Matthew Chan • October 21, 2026
Financial setbacks happen. Bankruptcies and consumer proposals are more common than most people realize—and they don’t define your future. Going through one doesn’t mean homeownership is off the table forever. It simply means lenders want to see that you’ve taken control, learned from the past, and built a stronger financial foundation moving forward. What lenders look at after a bankruptcy or consumer proposal How long it’s been since your discharge Your discharge date matters. For lenders, this is your reset point. There’s no law that says you must wait a specific amount of time before applying for a mortgage, but the longer your track record after discharge, the stronger your application becomes. What matters most is how responsibly you’ve managed your finances since then. Your credit rebuild Re-establishing credit is critical. After discharge, most people start with a secured credit card and use it consistently and responsibly. To be considered fully re-established, lenders typically want to see: Two active trade lines At least two years of clean payment history Credit limits of around $2,500 on each No late or missed payments Your down payment or equity The more money you can put down—or the more equity you have when refinancing—the lower the risk for the lender. A stronger down payment often opens the door to better terms and more lender options. Your debt service ratios Lenders will also look closely at how much of your income goes toward housing and other debts. The stronger your income relative to your monthly obligations, the easier it is to qualify. Conventional vs. insured mortgage options To access the most competitive mortgage products, lenders typically want to see: At least two years plus one day since discharge Fully re-established credit Minimum down payment requirements met Mortgage insurance in place if your down payment is under 20% (through CMHC, Sagen, or Canada Guaranty) Total debt obligations generally not exceeding 44% of your gross income Alternative lending options Not every situation fits neatly into a bank’s box—and that’s where alternative lending can help. Independent mortgage professionals work with both traditional and alternative lenders, including those who specialize in complex financial situations. These lenders look at the full picture: equity, income stability, and your plan moving forward. While rates and terms may not be as competitive as prime lending, alternative financing can be an effective short-term solution—especially if you need a mortgage before your credit is fully rebuilt. Let’s talk about your next step Whether you’re planning ahead for the best possible mortgage—or need a solution sooner rather than later—there are options available. If you’d like help mapping out a clear path forward, reach out anytime. I’d be happy to review your situation and help you build a plan that gets you back into homeownership with confidence.