First-Time Buyer Mortgage Planning Guide › Chapter 2

Rajiv, how do I build my credit?

By Rajiv Verma, Mortgage Broker · Mortgage Architects, FSRA Brokerage Licence #12728 · Updated November 3, 2026

Short answer: your credit decides which lenders will compete for your mortgage and how much flexibility you get. You build it by paying every bill on time, keeping card balances low, keeping your oldest accounts open, and avoiding new credit before you buy. Six to twelve months of good habits can make a real difference.

Where do I get my free credit reports?

You have two credit reports in Canada, one from each bureau. Lenders may check either one, so check both. Checking your own report never lowers your score.

Bureau	Free report online	By phone
Equifax	consumer.equifax.ca — free credit report	1-800-465-7166
TransUnion	transunion.ca — Consumer Disclosure	1-800-663-9980

Equifax’s free online score is available across Canada. TransUnion’s free online score is available to Ontario and Quebec residents. Both reports are free.

Government of Canada: getting your credit report and score →

What do lenders look at on my credit report?

• Payment history: late or missed payments, especially in the last 12 to 24 months
• How much of your limits you use: maxed-out cards are a red flag, even if you pay on time
• How long you’ve had credit: older accounts help
• Collections, judgments, consumer proposals or bankruptcies
• Recent credit applications: several in a short time can look like financial pressure
• Your score itself, which summarizes all of the above

For an insured mortgage, at least one borrower generally needs a score of about 600 or higher, and most lenders want more. A score in the high 600s or above, with clean recent history, gives you the most options.

How do I build my credit, step by step?

If you have little or no credit (newcomers, young buyers)

1. Open two forms of credit early, for example two credit cards, or a card and a small instalment loan (a secured card is fine if that’s what you can get)
2. Use them for one or two small regular bills
3. Pay the full balance every month

Lenders generally like to see at least two credit accounts with about two years of history. Newcomer programs can work with less; ask me.

If you have credit but your score needs work

1. Pay everything on time from today. Set up automatic minimum payments so nothing is ever late
2. Bring balances down, starting with cards closest to their limit
3. Pay before the statement date so a lower balance is reported to the bureaus
4. Ask for a credit limit increase on a card you manage well (don’t use the extra room). Ask whether it triggers a hard credit check, and skip it in the 6 months before you apply
5. Deal with collections: get it in writing whether a payment or settlement will be reported as paid
6. Dispute errors directly with the bureau that shows them

If you’ve had a consumer proposal or bankruptcy

Rebuilding is possible. Lenders look at how long ago it was discharged and how your credit has looked since. Re-establish two accounts and keep them perfect.

Can I get approved after a consumer proposal or bankruptcy? →

What should I do, and what should I avoid?

Do

• Check both reports now, and again three months before you apply
• Keep each card’s balance as low as you can; under about 30% of the limit is a good rule of thumb, lower is better
• Keep your oldest card open, even if you rarely use it
• Pay at least the minimum on everything, on time, every time
• Keep credit applications to a minimum in the year before you buy

Don’t

• Apply for store cards, car loans or “buy now, pay later” plans before closing
• Close old accounts to “clean up” your credit
• Co-sign a loan for someone else
• Ignore a collection notice, however small
• Pay for “credit repair” companies that promise to remove accurate information

Will a mortgage application hurt my credit?

A lender or broker’s credit check is a “hard” inquiry and can lower your score slightly for a short time. Working with a broker usually means one credit check to start, instead of applying at bank after bank. A lender may sometimes pull its own report.

Your credit checklist

• ☐ I’ve downloaded my free Equifax report
• ☐ I’ve downloaded my free TransUnion report
• ☐ I’ve disputed any errors I found
• ☐ My card balances are under about 30% of their limits
• ☐ I’ve set up automatic minimum payments on every account
• ☐ I’ve stopped applying for new credit

Frequently asked questions

What credit score do I need to buy a house in Ontario?
For an insured mortgage, about 600 or higher for at least one borrower is the general minimum, and most lenders prefer more. Your history matters as much as the number.

Why are my Equifax and TransUnion scores different?
Not every lender reports to both bureaus, and each bureau uses its own scoring model. That’s why it’s worth checking both.

How fast can I improve my credit score?
Lower card balances can show up within a month or two. Late payments and collections take longer to fade, which is why starting 6 to 12 months ahead helps.

Does paying off a collection remove it from my report?
No. A collection usually stays on your report for about six years from the date of last activity, paid or not. Showing it as paid does look better to lenders. Get the terms in writing before you pay.

Will the score I see match what the lender sees?
Not always. The lender may pull a different bureau or scoring version, so treat your own score as a guide.

Next up · Chapter 3What documents do I need?Continue reading →

Need a Realtor or a real estate lawyer? I can refer you to people I work with. Ask me during your Coffee Chat.

Rajiv Verma, Mortgage Broker · Mortgage Architects, FSRA Brokerage Licence #12728 · 15 Gateway Blvd, Unit 201, Brampton, Ontario · Office 289.505.0631 · Direct 647.291.7116
This guide is general education, not personal financial, legal or tax advice. Rates shown are examples as of November 3, 2026, for comparison only, and are not a quote or a commitment to lend. Your rate and approval depend on your application, credit, income, property and lender guidelines. Program rules can change.