Many clients ask what is my credit score? What does it really mean? What is the maximum score? Does applying for a mortgage affect my credit score?

A credit score is a numerical representation of a an individuals credit worthiness, which is a measure of how likely they are to repay borrowed funds. The maximum credit bureau score in Canada is 900 and the higher the score, the stronger the credit profile and likelihood of strong repayment terms, the lower the score indicates the borrower may have challenges in meeting their current and future financial obligations.

The credit score is based on a number of factors some of which include but not limited to the following: payment history, credit utilization, length of credit history, types of credit (credit card, loan, mortgage, etc) number of recent credit inquiries, employment and housing tenure.

Qualifying for a mortgage does have a slight affect on your credit history (based on number of inquiries by lenders), so my recommendation is to work with a mortgage broker who can pull your credit and then approach multiple lenders as opposed to going to these lenders individually and having each pull your credit report.

If you are considering improving your score by closing some of your trade lines or accounts, I suggest you close the accounts that were most recently opened as length of time an account is opened does have a impact on overall score. Home Ownership and mortgage borrowing also has a significant impact on increasing your overall credit score.

Credit Score is not the only item that lenders consider when extending credit, however it is a major item, so best to understand how it impacts you.