Credit Cards are usually registered in Canada by Equifax and Transunion. Both these bureaus have different methods of calculating credit scores but their results are always similar. The ideal score required for getting a mortgage approved is 650. The higher the score, the more chances of getting the mortgage approved. Anything below 600 is considered to be poor. Before you apply for a mortgage, you must check your credit information. A Certified Mortgage Broker will help you to understand the crucial role played by credit scores. Here is the classification of the credit score and how you can achieve them.
Excellent Score (900-740)
To have an excellent and extremely high credit score, you need to ensure that you make your payments on time, pay the full debt and use the less than the credit limit. When you have such a high score there are many benefits when it comes to getting a loan. You would be given a priority and the loan will get approved faster. There are also premium benefits for your mortgage and credit card. You don’t stand a chance of being rejected as the banks and private lenders would easily lend you the money. An excellent score is an indicator of you being a responsible person who has good financial skills.
Good Score (739-690)
The credit score indicates that you are responsible for your finances, so you will be able to get the exact mortgage you want with ease. Someone who has a good credit core practices making timely payments and minimizing credit card limits. With such a score, you can get low-interest rates from banks and alternative lenders. The process for approval is a lot easier. A bank would provide you with a loan without too many restrictions.
Fair Score (689-660)
Fair Credit Score is still a good credit score but it won’t get you the same benefits as an excellent and good credit score. You might have to pay a higher interest rate and some traditional lenders might not take your loan into real consideration. If you have a fair score, then it could be because you have made late payments regularly or gone overboard with your credit cards. The chances of you getting an unsecured loan from a private lender is higher than a secured loan from the bank.
Poor Score (649-570)
With a poor credit score, it becomes harder to get a mortgage from both banks and lenders. It reflects not managing your payments well, which the lenders might see as a risk. If you do manage to get a loan it would be at a high-interest rate.
Bad Score (569-300)
If your credit score is lower than 500, only very few lenders will consider giving you a loan. Your bad credit score is reflective of the poor financial choices you have been making continuously. When you have a bad credit score it will remain in your credit report for at least 7 years and it would be impossible for you to get a loan.