Credit scores. You’ve seen ads shouting about them, your bank mentions them, and your friends probably throw the term around — but do you actually understand what a credit score is, how it works, and why it matters?

If you’re confused, you’re definitely not alone. Many Canadians know their credit score matters, especially when applying for a mortgage, but few understand what’s going on behind the scenes. Let’s walk through it together — in plain English.

Imagine This: “Hey, Buddy, Can I Borrow $100?”

Picture this: your friend asks you to lend them $100. You pause for a moment before deciding. In your head, you’re doing some fast mental math — have they paid you back before? Do they tend to forget things? Can you trust them with this money?

That gut feeling? That’s you assigning them an informal “credit score.”

Lenders do the exact same thing. Before they hand over thousands (or hundreds of thousands) of dollars, they want to know if you’re likely to pay it back. But unlike your instincts, they use a real credit file with decades of financial information attached to your name — managed by a credit bureau like Equifax or TransUnion.

The Credit File That Never Forgets

Your credit history begins the moment you open a credit account — even if it was a $500 department store card you only used once. From there, every payment you make (or miss), every balance you carry, every loan you repay — it all gets tracked.

That time you forgot to make a payment back in 2014? Still there. That maxed-out card from a few years ago? That too. Your credit file doesn’t have a short memory, and it’s used by banks, mortgage lenders, landlords, even phone companies, to determine if you’re financially trustworthy.

How to Actually Improve Your Credit Score

So what do you do if your credit score isn’t where you want it to be?

The good news is: it’s not permanent. Your credit score is a living number — it can grow or shrink depending on your habits. The most important step is to start making your payments on time. Even one missed bill can drag your score down, and consistent, timely payments are the single most powerful way to build it back up.

Second, manage your debt wisely. Don’t max out your credit cards, even if you plan to pay them off. Try to use less than 50% of your available credit limit — ideally even less. For example, if your card has a $5,000 limit, keep your monthly balance under $2,500. Lenders love borrowers who use credit responsibly but don’t rely too heavily on it.

Also, try to keep your total debt load low. If you’re already carrying a large amount of credit card or personal loan debt, a mortgage lender may hesitate. They’ll want to know you can take on a home loan and handle your other obligations.

What Does My Credit Score Have to Do With Getting a Mortgage?

Your credit score plays a big role in your mortgage application, but it’s not the only thing lenders look at. They’ll also want to know how much money you make, whether your income is stable, what your job situation is, how you’re paid (salary, hourly, commission), and how much debt you currently carry.

That said, your credit score still matters — a lot.

In Canada, mortgage lenders typically rely on a version of your credit score called Beacon Score 9.0. This score estimates how likely you are to go 90 days without making a payment within the first two years of your loan. It’s based on your credit history and is considered a “hard inquiry,” meaning it will impact your credit slightly when it’s pulled.

Before approving a mortgage, most lenders — including nesto — will request your credit report directly from Equifax. This report must be current and within 30 days of your mortgage closing or renewal. Without it, they simply can’t approve your application.

If your score is above 700, you’re in great shape. That generally qualifies you for Canada’s best mortgage rates and the widest selection of mortgage options. If your score is below that, don’t panic — you may still qualify, but you’ll want to talk to a mortgage expert about your specific case.

Wait… What’s a “Good” Credit Score in Canada Anyway?

Credit scores range from 300 to 900, and the higher your number, the better. Think of it as a trust meter. If you’re sitting in the 750–800+ range, lenders consider you a “very low risk” — which means you’ll likely get the best offers. A score between 650–699 is still good but might come with slightly higher rates or conditions. If you’re under 600, you might still qualify — but likely with alternative lenders, and it may cost more.

Final Word: Don’t Be Intimidated by Your Credit Score — Learn From It

Your credit score doesn’t define you. It’s just a tool — a financial selfie, if you will — that lenders use to understand your borrowing habits. If your score needs work, that’s okay. Everyone starts somewhere. With consistent effort and the right advice, you can improve your credit health and open doors to better mortgage deals, car loans, and even rental approvals.

And if you’re thinking of applying for a mortgage soon, make sure your credit is ready. Speak with a mortgage expert who can help you understand your current score, show you ways to strengthen it, and guide you toward the best product for your profile.