Your credit report is one of the first things a lender looks at. It affects whether your loan is approved and sometimes the rate you're offered. Yet many first-time buyers have never looked at theirs. A few months of preparation is often enough to fix an error or improve your score.
Credit report vs credit score: two different things
In Canada, two agencies keep your credit report: Equifax and TransUnion. The report is your history: your accounts, limits, balances, late payments and the credit applications made in your name. Your credit score is a number calculated from that report.
The two agencies don't necessarily receive the same information from your creditors, and a lender may check either one. So you need to review both. You can get your report from each agency for free, and checking it yourself has no effect on your score.
What credit score do you need to buy a house?
For an insured mortgage (a down payment of less than 20%), CMHC's criteria call for a score of at least 600. That's a minimum, not a goal: each lender also applies its own criteria, and a stronger file gives you more options. Your score counts in addition to, not instead of, the debt ratios explained on our page about borrowing capacity.
What to check in your report
- Your personal information: name, addresses, date of birth, employer.
- Accounts: are there any you don't recognize? An unknown account can point to an error or to fraud.
- Late payments: are they accurate? A late payment recorded by mistake weighs heavily.
- Balances and limits: do they match your statements?
- Closed accounts: are they shown as closed?
- Credit inquiries: do you recognize each one?
Disputing an error
If any information is inaccurate, you can dispute it directly with the agency concerned, Equifax or TransUnion. Gather your evidence (statements, payment confirmations, a letter from the creditor) and keep a copy of everything you send. If the error shows up with both agencies, you'll need to dispute it with each one. Since a correction can take some time, check your report several months before you meet a lender.
Improving your credit score: what really counts
- Pay on time, every time. Your payment history is one of the factors that weigh the most. Set up automatic payments for at least the minimum.
- Lower your card utilization. A balance close to the limit hurts your score, even if you pay on time. Keep your balances well below your limits.
- Don't close your oldest cards without a reason: they lengthen your credit history and increase your available credit.
- Avoid new credit applications. Every application is recorded on your report. Before and during the buying process: no new card, no financed car, no "buy now, pay later" furniture.
- Pay off small debts: besides helping your score, every monthly payment you eliminate increases the amount you can borrow.
Your 3-month checklist before meeting a lender
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3 months before
Get and read both reports
Check your report for free with Equifax and with TransUnion. Note every error and start your disputes right away.
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2 months before
Bring balances down and automate payments
Pay down your card balances as much as possible, set up automatic payments and follow up on your disputes.
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1 month before
Freeze new applications and gather your documents
No more credit applications. Make sure the corrections have been made, then prepare your proof of income and your statements for the mortgage pre-approval.
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Until the signing
Change nothing
No new credit, no job change if you can avoid it, and payments always on time. The lender may check your file again before final financing.
Not sure yet whether it's the right time to buy? Start with the 10-question self-assessment.
Frequently asked questions
What credit score do you need to buy a house?
For an insured mortgage, CMHC's criteria call for a score of at least 600. Each lender also applies its own criteria, and a better score gives you more options.
How can I improve my credit score quickly before buying?
Pay all your bills on time, bring your card balances well below their limits, get any errors on your report corrected and avoid any new credit applications.
Does checking my own credit report lower my score?
No. Checking your own report with Equifax or TransUnion has no effect on your score. It's the credit applications made with lenders that get recorded.
