How to improve your credit for buying a home

Owning a home is not only a dream for many Canadians, but it is also a good investment – Why pay rent that gives you nothing when you can pay a mortgage that goes towards ownership of an asset that grows in value? 
The banks usually require a credit score of 650 or higher.  There are alternatives to the banks that will accept a lower credit score, but they are very expensive. Try to stay away from those, instead roll up your sleeves, and commit to getting started on improving your credit right away.  Its never too late.

The first thing you can do is sign up for Equifax or TransUnion and get access to your credit report so you have a good idea of where you stand.  Review it carefully and make sure there are no mistakes or incorrect information that can be negatively affecting your score.  If there are errors, dispute them asap.  You can receive a nice bounce in your score once these are rectified.

Always make sure to pay your bills on time as payment history accounts for 35% of your score. 

Do not close old credit cards or lines of credit – keep them open.  The older the credit account, the better history you have.  Even if you are not using the cards or line of credit, keep them open as they help to lower your debt to credit ratio.

Reduce your debt.  Try starting with the credit card showing the lowest balance due. Make an effort to pay that off until it is at $0 and then go on to the next lowest card, and so on.  If you have any credit cards that are past due or sitting above their limit, tackle them first with the minimum payment.


These are very simple steps that will help improve your credit score over time.  There is no quick fix, so the sooner you begin the faster you will get to your goal. Its easier than it seems if you commit to a steady plan.