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How to Get a Good Credit Rating to Get Approved for a Low Interest Mortgage in Ontario
Home Finance Mortgage & Debt
By: Paul Mangion Email Article
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If you would like to get approved for a low interest mortgage in Ontario, you will need to have decent credit. In Ontario and across Canada, if you plan to purchase a home with less than 25% down payment, you will have to qualify for high ratio mortgage insurance through The Canadian Mortgage and Housing Corporation (CMHC).

CMHC high ratio mortgage insurance insures the bank so that if you default on your mortgage, the bank can make an insurance claim for the money that they lose if they sell your home and there is a short fall. A bank in Canada cannot finance a mortgage with less than a 25% down payment without CMHC Mortgage Insurance. Mortgage investment corporations and finance companies that are not owned by banks can charge slightly higher interest rates.

This means that when you apply to get approved for a low interest mortgage in Ontario with a bank, your credit application will be scrutinized by both CMHC and your bank. If CMHC says that they will not high ratio insure your mortgage, then your bank won't approve your mortgage financing.

Here is how you can get a good credit rating to get approved for a low interest mortgage in Ontario.

First, most banks have a minimum credit score requirement in order for you to even qualify for a low interest mortgage in Ontario, or any mortgage at all for that matter. The minimum credit score required by the bank is usually 680. This means if your credit score is less than 680, the bank may not submit your application to CMHC and may decline your mortgage application outright.

Many factors go into having a good credit rating. These factors include the number of applications that you have made for credit in any given calendar year, your payment habits, how you use the credit you have, the balances on your credit cards in proportion to your credit limits, the amount that you owe to your creditors and the amount of credit available to you.

If you want to know how to get a good credit rating to get approved for a low interest mortgage in Ontario, your first step is to know what's on your credit report. You can request your credit report from Equifax and Trans Union online. If you request your credit report from Equifax, make sure to request a credit report that includes your FICO score because your FICO score is your credit score. Your credit report will show you what information your creditors are reporting to your credit report. If there is any information that is incorrect, file a dispute with the credit reporting agency online.

Even if you only have a single credit card that has a balance that is over 75% of your credit limit, work on a plan to pay it down below 75% below the credit limit. If you have a number of credit cards that you don't use, close some of them. If you have a number of inquiries or late payments reporting to the credit report, this is a problem that only time can heal. You credit score will be impacted by credit inquires in the past 12 months, so if you have had many, you will need 12 months to pass without credit inquiries before your credit score reflects the improved behaviour. With respect to late payments, you will need at least 2-3 years of good payment habits after having late payments to see significant improvement to your credit score.

Paul Mangion is the Principal Mortgage Broker and President of The Mortgage Centre Mississauga and the founder of the Tax Resolution Centre. To contact Paul call 416-204-0156, if you would like information about mortgage financing visit or if you have a tax problem, please visit

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