5 Criteria of Credit Ratings

Chances are, if you plan on buying a home, your down payment will not be of the 100% variety and you will need to have a seriously enviable credit rating if you want to score a mortgage worthy of a dream home.

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But what is your credit rating based on? You’d be surprised because it is not all about how much money you have in your account or what your annual salary look like. The five main criteria for calculating your debt, and therefore your credit rating, include:

10% is based on how many times your credit gets checked per year (no matter if it’s you, banks, stores, etc.)

10% is based on the type and amount of credit you have. If you have 6 credit cards each with a $10,000 limit, that is scary to mortgage lenders.

15% is based on the longevity of your credit. Have you had these credit cards and lines of credits for years without ever defaulting? Bravo!

30% is based on how much of your available credit you’re actually using at the moment. If you have $30,000 in credit and you borrowed $27,000 of it, uh yeah, there might be some issue with that.

35% is based on bill repayment. Do you pay off your entire credit card debt every month? Do you pay your utility bills on time? These things matter. Big-time.

Ideally, you shouldn’t check your credit score more than twice a year. If you exceed that amount, there’s a good chance you will hurt your credit.

Also, if you have been slacking with paying your bills, you might want to get on that and start paying them on time. A lot of banks offer you the option to do preauthorized payments on a monthly basis.

While credit is a “great-to-have” it would serve you best not to borrow more than 30% of your credit. More than that and you might raise a red flag.

So if your credit rating is awesome and you are ready to start your home shopping, make sure to visit ComFree today and see the amazing homes for sale across Canada.


  1. troy says:

    It makes a valid point about carrying multiple credit cards. Might be an idea just to have a line of credit open instead of trying to remember what card payment is due this month!

  2. I especially like these five points because it explains how the point system of FICO scores works, and how it is weighted by percentage. Many people might think they are doing “just” about everything right, but not understand the concept of how many credit cards they should have, how they should be paying them off or at least making “on time” payments. Great information.

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