It isn’t always the most straightforward journey for Canadians to meet the requirements to get approved for a mortgage. Nonetheless, it’s a dream you can achieve once you know the proper approval requirements to buy a home. According to Statistics Canada, the amount of new mortgage lending by chartered banks reached record levels in 2020, which surpassed $42 billion. For many Canadians, young and old, it’s a lifetime milestone to achieve homeownership. Buying your own house is a financial goal that millions of people around the world strive to obtain. But of course, it’s not always the easiest or quickest goal to reach.

It can be expensive to buy a house. You need a good credit score and credit history, decent income and a down-payment, among many other factors. So if you are wondering what credit score you need for mortgage approval, keep reading!

Credit Score Ranges in Canada:

Firstly, you must know your credit score before applying for a mortgage. In Canada, there are two credit bureaus – TransUnion & Equifax. They both use different types of credit scoring models (such as the Risk Score & Vantage Score 3.0 credit score) to calculate your credit score from your credit report data. Once the credit bureaus calculate your credit score, it will range from 300 to 900. Check out the credit score ranges:

  • 300 to 600: If your credit score is in this range, you are more than likely facing a poor credit score. It will be difficult to obtain financial products while in this credit score range, and you may face higher interest rates.
  • 601 to 657: A credit score between 601 and 657 is considered fair. It will still be difficult to obtain favourable interest rates on loans or credit cards, and improvement is needed to achieve the best interest and loan terms.·
  • 658 to 719: You have a good credit score. Keep up the excellent work. You have various credit choices to choose from due to your financial habits, which include great interest rates.
  • 720 to 900: You have an excellent credit score. Congratulations!

How To Get Mortgage Pre-Approval in Canada?

Mortgage pre-approval allows you to understand the debt you’ll be taking on. In addition to whether you will be able to handle the financial strain of a mortgage. To gain pre-approval, many borrowers apply for pre-approval around 2 to 4 months before they plan to purchase a home. Canadian’s who gain pre-approval will often have the minimum credit score required, among other mortgage requirements.

At this stage of the mortgage process, your lender will assess your financial profile to decide how much money they will grant you and at what interest rates. In addition, your mortgage pre-approval will provide you with insight into what your mortgage payments will be. A mortgage pre-approval allows you to understand how the mortgage process will impact your whole financial picture.


What Are The Credit Score Requirements For A Mortgage In 2021

If you’re looking to obtain a mortgage in 2021, the minimum credit score needed to get approved is 640. Therefore, It all depends on your lender. But generally, an average credit score between 620 and 680 is considered minimum credit. For that reason, remember, your credit score is only one factor required to get approved for a mortgage in 2021. In addition, your potential mortgage lender may look at several other factors. For example, this may include your income, your debt ratio or more. For example, if you had a higher credit score but a low income, you may be okay. But if you have a high debt to credit score ratio, and don’t have a credit score of 620, you may not be approved.


In addition, the credit scores required to gain mortgage approval may depend on how much you need to borrow. It depends on how long it will take you to pay your loan back (amortization). Also, since your credit score is a tool used to assess you (the borrower) as a risk, you need a higher credit score for a higher loan amount like a mortgage. Also, you will have to undergo a mortgage stress test to test how you and your finances may be affected if your finances take a turn during your mortgage period. This factor is a consideration among many when you are looking to gain mortgage approval and have the minimum credit score.


Is 640 a good credit score to buy a house?

In short, yes. But again, it depends on your potential mortgage lender and many other factors. If you have lots of debt and a low income, a 640-credit score may not be enough for your lender to approve you for a mortgage. So honestly, the higher the credit score, the better (as always). It’s essential to check with your lender on their approval criteria to see if your credit score of 640 will allow you to gain approval.


What Other Factors Do Lenders Consider When Applying For A Mortgage?

As discussed, many other factors will affect mortgage approval, besides having the minimum credit score required. For example, your potential mortgage lender will check your income, employment record, general expenses, the amount you’re planning to borrow, your current debts and the amortization period.


Can I Get A Mortgage With A Bad Credit Score?

Generally, if you have a credit score below 620, lenders will not consider you for mortgage approval. A low credit score provides a lender with insight that you may not have been managing past debt reliably, which means you’re at more significant risk of missing mortgage payments. A mortgage is a huge commitment and can often last until retirement age! If your credit score is poor, use that as an indication that you may need to improve your debt management skills before obtaining your first mortgage. You can improve your debt management skills in our Maestro course online for free here.

How Do I Improve My Credit Score For Mortgage Approval?

When you’re ready to improve your credit score for mortgage approval, we would recommend upgrading to a MyMarble Premium Subscription and utilizing the Budget & Points Simulators. These simulators will allow you to pick a target credit score and provide you with specific personalized recommendations on what you should do next to reach this credit score. Alongside MyMarble, there are many small steps you can take to improve your credit score. Check out these three tips:

  • Check your credit report for errors. If you haven’t already, it’s important to obtain your credit report from BOTH credit bureaus to check for errors. There may be a reporting error on your credit report that’s costing you valuable credit points. You can learn how to dispute a credit report error here.
  • Lower your credit utilization rate. Your credit utilization ratio is how much of your total credit limit you have used. So for example, if you have a total credit limit of $1000, you should try not to use 30% of that figure. If you utilize too much of your available credit, it may indicate to creditors that you may be at risk of missing a payment.
  • Obtain a secured credit card. A secured credit card is a type of credit card backed by a cash deposit from the cardholder. This deposit acts as collateral or security on the account. So basically, no credit check is needed to obtain one. But you can still improve your credit score with it. You can discover the best-secured credit cards here.



Marble Financial empowers Canadians to achieve their financial goals with MyMarble, Canada’s best virtual financial fitness trainer. Got a financial goal? MyMarble will help you reach it by providing you with personalized recommendations on how to improve your credit, better your budget and eliminate debt slowly.