A credit score of 680 or higher will give you access to the best mortgage rates from A-lenders like major banks. If your score is lower, you still have great options, but your path to approval will be different. Understanding “does credit score affect mortgage pre-approval” is the first step to getting the best possible deal.
We have helped hundreds of clients with varying credit scores get into their dream homes. Let’s explore what your score means for you.
How Your Credit Score Impacts Pre-Approval and Rates
Think of your credit score as a key. A higher score unlocks more doors with better options.
A-Lenders (Major Banks & Credit Unions)
A good credit score for a mortgage is usually 680 or higher. This score gives you the best chance of getting approved by a major bank and getting their lowest interest rates.
CMHC-Insured Mortgages
If your down payment is less than 20%, your mortgage needs to be insured. For this type of loan, you usually need a credit score of at least 600 to be approved.
B-Lenders (Alternative Lenders)
If your score is a little lower, maybe between 600 and 679, you still have great options. You might get a bad credit mortgage pre-approval with a B-lender. Their rates can be a bit higher, but they are a fantastic path to homeownership.
Denial
If your score is very low, lenders see this as high risk. This can sometimes lead to your application being denied for now. But don’t worry, you can always work on improving it.
A higher credit score also gets you a lower interest rate. This is because lenders see you as a safe bet. A lower score means a higher rate, which can cost you thousands more over the life of your loan.
Does a Credit Check for Mortgage Pre-Approval Hurt Your Score?
Beyond Your Score: Other Factors Lenders Consider
Your credit score is very important, but it’s not the only thing lenders look at. They want to see your whole financial picture.
Stable Income
Lenders will want to see that you have a steady and reliable income. This is true for all types of borrowers, including those who need financing for business in BC.
Debt-to-Income Ratio
Your debt-to-income ratio is how much of your monthly income is used to pay for your debts. Lenders want to see that you have plenty of room in your budget for a new mortgage payment.
Down Payment
A larger down payment always makes your application look stronger. It shows that you have good saving habits.
Employment History
Lenders like to see that you have a consistent work history. Our team provides many different services to help people from all walks of life get into a home.
How to Improve Your Credit Score for Mortgage Pre-Approval
If your score is not where you want it to be, don’t worry. You can take simple steps to improve your credit score for mortgage approval.
Good credit is especially important for complex loans, like construction financing.
Ready for Your Pre-Approval?
As you can see, your credit score is a very important part of the home-buying process.
Understanding does credit score affect mortgage pre-approval is the first step to empowering yourself as a buyer. Now you know how to prepare.
Let our team of experts help you get the best possible approval for your situation. Apply Now for a free, no-obligation consultation.
Author Bio
Asim Ali is a Principal Mortgage Broker with over a decade of experience helping BC clients navigate the mortgage approval process. He is an expert in credit strategies and is passionate about empowering homebuyers with the knowledge and tools they need to secure the best possible financing.