How Your Credit Score Affects Mortgage Approval in Canada

Your credit score is an important part of a mortgage application, but it is not the only factor. Your income, existing debts, down payment, employment history, property details, and selected mortgage product also contribute to the final decision.

A stronger credit profile may support access to more mortgage options and terms. A shorter or less established credit history may require additional documents or a more detailed review, but it does not automatically mean that an application will be declined.

Understanding how credit is assessed can help you prepare a stronger application. It can also help you avoid financial changes that may affect your eligibility before the mortgage has been completed.

What Does Your Credit Score Show?

A credit score is a three-digit summary of how you have managed borrowed money over time. It is calculated using information reported to Canada’s credit reporting agencies by financial institutions and other credit providers. In Canada, scores generally fall within a range of 300 to 900.

Your score does not measure your income, savings, or the value of your assets. Instead, it reflects factors such as payment history, account balances, credit usage, account age, and recent applications for new credit.

The main factors that may affect your credit profile include:

• Whether payments have been made on time
• How much of your available credit is being used
• How long your credit accounts have been open
• Whether you have recently applied for new credit
• The types of credit accounts shown on your report

The score you see through a bank app, a credit monitoring service, or a credit reporting agency may also differ from the score obtained during a mortgage application. Different scoring models and different reporting dates can produce different results from the same credit history.

Is There a Minimum Credit Score for a Mortgage?

There is no single minimum credit score that applies to every mortgage application in Canada. Requirements may vary depending on the mortgage product, transaction, property, down payment, and whether mortgage default insurance applies.

One published threshold applies to insured mortgages. When the down payment is less than 20%, the mortgage must be insured, and mortgage default insurers generally require a minimum credit score of 600 for at least one borrower, although published requirements vary by insurer. This is an insurer requirement rather than a Marathon requirement, and meeting it does not by itself result in approval.

The applicant’s income, debts, employment, credit history, and ability to manage the proposed payments can also affect the decision. A score that is acceptable for one application may not be sufficient for another with different circumstances.

Marathon Mortgage may review a range of credit profiles, depending on the complete application and the product being considered. Published credit thresholds should not be treated as guarantees of approval.

Credit policies, insurer requirements, and mortgage products may change over time. The applicable requirements can only be determined after the complete application and supporting documents have been reviewed.

When More Than One Applicant Is Involved

When two or more people apply together, the credit profile of each applicant is reviewed. Income and debts are assessed as a combined household position, but credit history is not averaged across the application. A weaker credit profile on one applicant may affect the products and terms available even when another applicant has a strong history, and the way this is handled varies by lender, product, and whether the mortgage is insured.

Insurer requirements are also written in terms of individual borrowers rather than the application as a whole, which is why the insured mortgage threshold refers to at least one borrower. Applicants in this situation benefit from reviewing both credit files before applying, since addressing balances or payment records on one file may change the options available to the application overall.

How Credit Can Affect Your Mortgage Options

Your credit profile may influence the mortgage products, terms, and pricing available for your application. A stronger history may support access to more options, while a limited history or recent payment issues may result in additional conditions or documentation.

Mortgage eligibility and pricing are not based on the credit score alone. Marathon also considers the applicant’s income, existing debt obligations, down payment, property details, mortgage type, amortization, and current product guidelines.

The review may consider:

• Income and employment stability
• Existing monthly debt payments
• Down payment amount and source
• Loan-to-value ratio
• Property type and location
• Mortgage product and transaction type
• Amortization period
• Current underwriting requirements

A specific credit score does not guarantee a specific mortgage rate. The applicable product, rate, and terms depend on the complete application and the options available when the mortgage is reviewed.

How Credit Inquiries Are Recorded

Not every credit check affects a report in the same way. Reviewing your own credit information is generally recorded as a soft inquiry and is visible only to you. A check completed by a lender or credit provider as part of an application is generally recorded as a hard inquiry and is visible to others reviewing the report.

A single mortgage-related inquiry is a normal part of the process. Several applications for different types of credit within a short period may have a greater effect, because the pattern reflects a broader change in circumstances rather than one planned transaction. Some scoring models group multiple inquiries for the same type of credit made close together, but this treatment depends on the model used and should not be assumed.

How to Strengthen Your Credit Profile Before Applying

Improving a credit profile generally requires consistent financial habits rather than a single action. Starting early provides more time to address balances, payment issues, or inaccurate information before submitting an application.

Make Payments on Time

Payment history is an important part of a credit report. Missing payments on credit cards, loans, lines of credit, or other accounts may affect both the credit score and Marathon’s review of the application.

Setting up automatic minimum payments or calendar reminders can reduce the risk of missing a due date. Payments should continue to be made on time throughout the application and funding process.

Reduce Credit Balances

High balances on credit cards and lines of credit may affect the credit score and increase the monthly debt obligations included in the mortgage assessment. This can reduce the mortgage amount an applicant may qualify for.

Reducing revolving balances may strengthen the overall financial profile. It can also provide more room in the household budget for mortgage payments and other property-related expenses.

Review Your Credit Reports

Reviewing your credit reports before applying provides time to identify unfamiliar accounts, incorrect balances, inaccurate payment records, or personal information that may require correction.

Equifax and TransUnion may contain different information, so reviewing both reports can provide a more complete picture. The Financial Consumer Agency of Canada advises consumers to order their credit report from both credit reporting agencies at least once a year, and both agencies provide a method to request a report at no cost.

Checking your own credit information does not typically lower your credit score.

Allow Time for Changes to Appear

Updated information does not appear on a credit report immediately. Balances, payments, and corrections are reported on the schedule used by each creditor and agency, so changes made shortly before an application may not be reflected in the report reviewed with the file.

What to Avoid Once an Application Is Underway

Changes made during the mortgage process may affect the final decision. Marathon may verify credit, income, debts, employment, down payment, and other application information before the mortgage is completed, and an approval given at the start of the process is based on the information available at that time.

Actions that may change the assessment include:

• A missed payment during the application process
• A new vehicle loan or financing plan
• An increase in credit card or line-of-credit balances
• Several new credit accounts opened in a short period
• Closing an established account without reviewing the effect
• Co-signing a new loan or credit product
• Inaccurate information left uncorrected on a credit report

New obligations may increase monthly payments and generate an additional credit inquiry, which can affect eligibility even after the initial review has been completed. Significant purchases on credit are best deferred until after funding.

The information provided during the initial review should remain accurate through the completion of the mortgage. Material changes should be raised early rather than left to surface later in the process.

If Your Credit Profile Is Not Where You Want It

A credit profile that does not currently meet the requirements of one product does not end the process. Depending on the circumstances, an application may be reviewed against a different product, supported by a larger down payment, strengthened with additional documentation, or revisited after a period of consistent payment history. Which of these applies depends on the complete file rather than on the score alone, so the practical step is to establish the position before applying rather than after. Reviewing both credit reports, confirming current balances and payment records, and discussing the file with a licensed mortgage broker allows you to identify the available options while there is still time to act on them.

Preparing for Your Mortgage Application

Your credit score can affect mortgage approval and the options available, but it does not determine the result by itself. Preparing early, keeping credit activity stable, and providing complete information can support a more efficient review. It can also reduce the risk of unexpected issues before the mortgage is completed.

Marathon Mortgage products are available through licensed mortgage brokers. A broker can review your credit profile alongside your income, debts, down payment, and property details, and confirm which products may be available for your circumstances. All products remain subject to current terms, conditions, property requirements, product availability, and underwriting approval.

Disclaimer: The information provided in this article is for general educational purposes only and should not be considered financial, legal, tax, or accounting advice. Any examples, calculations, payment estimates, or scenarios are illustrative only and are not guarantees or forecasts of future interest rates, mortgage payments, or market conditions. Mortgage rates, products, terms, policies, features, and eligibility requirements are subject to change without notice and may vary based on the applicant, property, province, and transaction. All mortgage applications are subject to underwriting review, approval, and applicable conditions. Every borrower’s situation is unique. Existing Marathon Mortgage clients should contact Marathon Mortgage directly regarding their mortgage, renewal options, or product features. Information is current as of the publication date and may change over time.