Most people believe that getting their credit report from Equifax or Trans Union Canada is the quickest and most accurate way of measuring their credit score and of forecasting whether they’d be approved for a mortgage. However, what many of them don’t know is that there’s actually no consistency among all of these financial reporting sources. Your credit score can vary drastically depending on different report providers and is rarely the same number that lenders will see!
It’s normal to be fixated on the concept of checking your credit report, since Canadians are so used to living by that golden number. In order to finance a car and even rent some apartments, a positive credit rating is needed. But in the case of buying a home, we recommend focusing on overall credit health versus a tangible credit score – specifically because lenders often order credit reports that are built to meet their specific needs.
To put it simply, the only credit score that matters in the homebuying process is the one that your lender sees when you submit your application. Chances are that you haven’t seen what this score is yet, even if your general credit hygiene would probably give you a good idea.
Once you provide your signed consent for a lender to analyze your credit history, they’ll be looking closely at the FICO Score 8 on the report that’s generated. The overall report will display various measures to lenders, but this is the one they most often pay attention to and is the number that they cite when anybody asks about your credit score.
Over 90% of Canadian lenders use the FICO Score 8, including all of the big banks – you just can’t access it on your own. However, what a traditional credit report CAN do is give you an overall picture of your financial health and help you gain a deeper understanding of what you can do to improve it.
Wondering how to improve your credit score ahead of buying a home? Give us a call today at 613-228-3888 and we will be happy to offer you tailored advice based on your financial situation.