How to Improve Your Credit Score Before Applying for a Mortgage

Buying a home is one of the biggest financial decisions you’ll ever make, and your credit score plays a key role in getting the best mortgage deal. I get it—working on your credit score can feel overwhelming, especially when you’re excited about getting into your new home. But the good news is that there are some simple steps you can take to boost your score and get yourself mortgage-ready!

Here’s a breakdown of actionable tips that can help you right away:

1. Check Your Credit Report for Mistakes

You’d be surprised how often credit reports contain errors, like wrong balances or even accounts that don’t belong to you! Reviewing your report allows you to catch these issues and dispute them.

Action Step:

• Request a copy of your credit report from Canada’s two major credit bureaus—Equifax and TransUnion. You can do this once a year for free.

• Go through the report carefully, checking for any inaccuracies. If you find any, file a dispute with the credit bureau. This process can take some time, but fixing errors could give your score an instant boost.

2. Pay Down Your Credit Card Balances

Credit utilization is the amount of credit you’re using compared to your total available credit, and it makes up about 30% of your credit score. Keeping your balances low can have a huge impact.

Action Step:

• Aim to keep your balances below 30% of your credit limit. For example, if you have a credit card with a $5,000 limit, try to keep your balance under $1,500.

• If you’re carrying high balances, make a plan to pay them down little by little. Start with the card that has the highest interest rate to save on interest fees.

3. Don’t Apply for New Credit (For Now)

Each time you apply for a new credit card or loan, the lender performs a “hard inquiry” on your credit report, which can temporarily lower your score. Multiple inquiries can raise red flags for lenders.

Action Step:

• Avoid applying for any new credit at least 6 months before applying for a mortgage. If you’re considering a big purchase like a car or furniture for your future home, try to hold off until after your mortgage closes.

4. Pay Your Bills on Time, Every Time

This one might seem obvious, but it’s one of the most important factors in your credit score. Even one late payment can bring down your score and make lenders wary.

Action Step:

• Set up automatic payments or reminders for all your bills—credit cards, utilities, even subscriptions.

• If you miss a payment, try to make it up as quickly as possible. A late payment might hurt your score, but catching up quickly shows responsibility.

5. Reduce Your Debts

Lenders like to see that you can manage your existing debts before taking on a mortgage. A high debt-to-income ratio (how much you owe vs. how much you make) can make mortgage approval difficult.

Action Step:

• Make a list of your current debts (credit cards, loans, etc.) and prioritize paying down the ones with the highest interest rates first.

• Even reducing your debt by a small amount can improve your credit score over time.

6. Keep Old Accounts Open

It might feel good to close a credit card you no longer use, but that can actually hurt your credit score by reducing the average age of your credit history and your available credit.

Action Step:

• Keep old accounts open, even if you’re not actively using them. The longer your credit history, the better it looks to lenders.

• If you’re tempted to overspend, hide the card or even cut it up—but leave the account open.

Final Thoughts: Start Early and Stay Consistent

Improving your credit score doesn’t happen overnight, but these steps can help you make steady progress. The sooner you start, the more confident you’ll feel when it’s time to apply for your mortgage.

I know working on credit can be stressful, but don’t worry—you’re not alone in this journey! I’m here to help you every step of the way, and I’m always happy to chat about your mortgage options when you’re ready.

Bonus Tip: Monitor Your Credit Regularly

Keeping an eye on your credit report is key to maintaining a healthy credit score. Mistakes on your report, like incorrect information or fraudulent activity, can hurt your score without you even realizing it.

Action Step:

• Sign up for a free credit monitoring service or check your credit report at least once a year through Canada’s two main credit bureaus (Equifax and TransUnion). Dispute any inaccuracies right away to keep your score as high as possible.