How to Improve Your Credit Score: A Practical Guide for Canadian Home Buyers

Your credit score plays a major role in your overall financial health — especially if you’re planning to buy a home. It can impact whether you qualify for a mortgage, which lenders will approve you, and how much interest you’ll pay over time. The good news is that credit is not fixed. With the right approach, it can almost always be improved.

Whether you’re hoping to buy soon or just want to strengthen your financial position, understanding how credit works — and what actually improves it — puts you in control.

Why Your Credit Score Matters

Lenders use your credit score and credit history to assess risk. For mortgage applications, your credit affects:

• Approval and lender options
• Interest rates offered
• Mortgage flexibility and terms

A stronger credit profile often means better rates and more options. A weaker profile doesn’t always mean no, but it does mean strategy becomes more important.

Understanding What Lenders Look At

While your credit score is important, lenders look at more than just one number. They review your full credit profile, including payment history, how much credit you’re using, how long you’ve had credit, and how you’ve managed it over time.

Improving credit is about strengthening these areas — not chasing perfection.

Check Your Credit Report Regularly

One of the best first steps to improving your credit is reviewing your credit report. Errors and outdated information are more common than most people think—and they can quietly drag your score down.

Checking your report helps you spot inaccuracies, confirm balances, and make sure your accounts are being reported correctly. Fixing errors can sometimes lead to quick credit improvements without changing your spending habits at all.

Equifax is the bureau most lenders use, and you can pull your report for free here

👉https://www.equifax.ca/personal/products/equifax-consumer-credit-report/

It’s a simple step that puts you back in control of your credit

Pay Bills on Time — Consistency Matters

Payment history is the biggest factor in your credit score—so even one missed payment can make a difference.

If due dates are hard to keep track of, setting up automatic payments or calendar reminders can go a long way in protecting your credit. Making consistent, on-time payments shows lenders that you’re reliable and financially responsible.

A bonus tip: paying your bill before it’s due (or even before the statement arrives) can also help improve your credit over time.

Reduce Debt Strategically

High debt balances, especially on revolving credit like credit cards, can lower your score. Paying more than the minimum amount and focusing on high-interest accounts first can make a significant difference.

This approach not only improves your credit score but also reduces the amount of interest you pay over time.

Keep Credit Card Balances Low

Credit utilization — how much of your available credit you’re using — plays a major role in credit scoring. A good general rule is to keep balances below 30% of your credit limit.

Even if you pay your cards in full each month, high balances reported at statement time can still impact your score. Paying balances down before statements are issued can help.

Avoid Opening New Credit Before a Mortgage

Applying for new credit creates hard inquiries, which can temporarily lower your score. Too many inquiries in a short period may also concern lenders.

If you’re planning to apply for a mortgage, it’s best to avoid opening new accounts, financing large purchases, or taking on new debt unless it’s part of a planned strategy.

Maintain Older Credit Accounts

The length of your credit history matters. Older accounts demonstrate long-term credit management. Even if you no longer use a card frequently, keeping it open with a low or zero balance can benefit your score.

Closing older accounts too quickly can shorten your credit history and reduce available credit, which may negatively affect your profile.

Consumer Proposals and Mortgage Qualification

A consumer proposal doesn’t prevent you from getting a mortgage, but it does affect lender requirements.

After a proposal is fully paid and discharged, traditional lenders (ie banks, credit unions and monoline lenders) typically want to see two active trade lines opened AFTER discharge, along with two years of re-established credit. In some stronger applications, approval may be possible after one year post-discharge, but this is less common.

If you’re purchasing with more than 20% down, an alternative lender may be an option as soon as the proposal is paid out. For homeowners, refinancing can sometimes be used to pay out a consumer proposal and consolidate debt, depending on equity and income.

The key is planning ahead — the right strategy depends on your timeline, credit rebuild, and equity position.

Be Strategic, Not Perfect

You don’t need perfect credit to qualify for a mortgage. Many buyers are approved with average credit when their file is structured properly.

Often, improving one or two key areas — such as lowering balances or correcting errors — is enough to move into a better approval range. The goal is progress, not perfection.

When to Get Help

If improving credit feels overwhelming or unclear, professional guidance can help. A mortgage professional can review your credit with lender guidelines in mind and help create a realistic improvement plan based on your goals and timeline.

Starting early — even six to twelve months before buying — gives you more options and reduces stress later.

Final Thoughts

Improving your credit score is one of the most effective ways to increase buying power and reduce long-term borrowing costs. With consistent habits, a bit of planning, and the right support, most people can strengthen their credit profile and open the door to better mortgage opportunities.

Strong credit doesn’t happen overnight — but it does happen with the right approach and a clear plan.