Your credit score plays a crucial role in your financial life, especially when it comes to getting approved for a mortgage. Yet, many Canadians still don’t fully understand how credit scores work or how they can affect major financial decisions. Let’s break it all down in simple, real-world terms.

Understanding the Basics – Trust, but Verified

Think of your credit score as your financial trustworthiness rating. Just like you might hesitate before lending a friend money based on their past habits, lenders look at your credit history to decide whether to trust you with their money. Your credit file—maintained by credit bureaus like Equifax—tracks your financial behaviour: how much you borrow, how promptly you repay, and how responsibly you manage your debts. It’s all in there.

If you’ve ever missed a payment, maxed out a credit card, or taken out multiple loans, that information stays on record for years. This file helps lenders determine your credit score, which is a three-digit number usually ranging from 300 to 900. The higher the number, the better your chances of getting approved for loans and at better interest rates.

You Can Run, But You Can’t Hide From Your Credit History

Your credit file is like a diary you didn’t know you were keeping. That store credit card you opened in 2010 and never used again? Still there. That one missed payment in 2014? Also still there.

Once you start using credit—whether it’s a student loan, a credit card, or a car lease—your credit profile begins building. And just like trust in a relationship, your credit score takes time to develop but can be damaged with just one misstep. The good news is: the more responsible you are, the faster it recovers.

How to Improve Your Credit Score – Step by Step

If your credit score isn’t where you want it to be, don’t worry. Improving it is completely doable with consistency and discipline. The most important habits are:

First, never miss a payment. Whether it’s your credit card, cell phone, or utility bill—late payments are red flags. If you can’t pay in full, at least pay the minimum amount due, and always pay on time.

Second, keep your credit usage low. Ideally, try not to use more than 30–50% of your available credit. For example, if you have a credit limit of $10,000, try not to carry a balance of more than $3,000 to $5,000.

Third, avoid taking on too many new debts at once. Applying for several credit cards or loans in a short period can negatively impact your score. Every time you apply for credit, a lender pulls your report, which is called a “hard inquiry,” and too many of those can lower your score.

And finally, keep older credit accounts open. Length of credit history matters. If you’ve had a credit card for five or ten years and don’t use it often, consider keeping it open anyway. It contributes to your credit age, which boosts your score.

Your Credit Score and Your Mortgage Application

When you apply for a mortgage, your credit score is one of the first things lenders look at—but it’s far from the only factor. They also consider your income, your employment status, your existing debt load, and how you’re paid (salary, hourly, self-employed, etc.).

Mortgage lenders in Canada typically use something called the Beacon Score 9.0, provided by Equifax. This specific version of your score predicts how likely you are to miss a payment in the first two years of the mortgage. When you apply, lenders will do a hard pull of your credit file, which slightly affects your score. That’s why it’s best to limit the number of mortgage applications you make at once.

At nesto, your credit score is required to move forward with your mortgage approval. This report must be current—within 30 days of your expected closing date. That’s why we pull your score from Equifax during the qualification or pre-approval phase.

As a general guide, scores above 700 open the door to the best mortgage rates and features. Scores below that can still qualify, but you might face higher rates or more restrictions. If your score is below 600, you may need to work on your finances before qualifying at all.

Final Thoughts – Your Credit Score is a Tool, Not a Judgment

It’s easy to feel intimidated by your credit score, but don’t let it define you. It’s simply a snapshot of your current credit habits. Like any tool, it can be improved, sharpened, and used wisely.

Whether you’re years away from buying a home or starting the mortgage application process tomorrow, now is the perfect time to check your score and work on building strong financial habits. And if you’re not sure where you stand or what to do next, talking to a mortgage expert can give you the clarity and guidance you need.

The bottom line: your credit score matters—but what matters more is how you manage your money day-to-day. Make smart choices consistently, and you’ll see your score reflect that over time.