Mortgage 101 – Taking Control Of Your Credit | August 14th, 2023

Credit is key when it comes to getting a mortgage. In this segment of Mortgage 101 Clinton and Todd are helping you better understand your credit score. The two chat about the biggest factors that impact your score, what factors will raise more questions, what not to do before a mortgage closes and how to fix your credit issues.

Todd Veinotte 00:00
I want to talk a little bit about credit, because credit is obviously a key component to any mortgage. And it’s probably one of the first things when you’re when you meet people, you’re probably in your conversation trying to gauge that right out of the gate I would think eh?

Factors that impact your credit score

Clinton Wilkins 00:20
Honestly, if we asked them upfront, even before they get an appointment booked, like, how do you think your credit looks? And people are like, I don’t have any idea how it looks. I think my credit is excellent. Or I think my credit is terrible. And you know, there’s a wide range. There’s two credit reporting agencies in Canada, there’s TransUnion, and Equifax. And there’s actually two free apps that you can download. And I love things for free. But you don’t get anything really for free, because they’re gonna try to sell you some advertising. The first one is Borrowell, and the data that they’re bringing in is from Equifax. And the second one is Credit Karma. And they bring in their data from TransUnion. It’s weekly credit monitoring, they’ll email you, they’ll give you notifications. And you can keep an eye on your credit and see how things look and see what you think your likelihood are is being approved. Regardless of the monitoring, both credit reporting agencies have a maximum score of 900. And typically what we say anything over, you know, 720 is stellar. Typically, to get approved for prime mortgage, you need to have a score of at least 600. But if you have a score that is really, between 607 and 700, there needs to be a good story like why is the score low? Is it utilization? So that utilization, what that means is, is it the percentage of how much you owe compared to what your limit is? Is it your payment history? Are you making your payments on time? And is it your credit mix? So are all of your trades from, you know, bank lenders or credit unions. Or are they more from finance companies and things like that. Having the right mix is really important, making your payments on time, but also having the mix between installment accounts like loans and leases and things like this. And revolving accounts, like lines of credit and credit cards, this all makes an impact on your credit. What makes basically makes the least amount of impact is inquiries and your addresses, they still do make an impact. Don’t get me wrong. But people think inquiries is the biggest thing that impacts your credit. It’s not. It’s really utilization and payment history. Those are the two things that are going to give you the most amount of impact on your credit. And, you know, I think there’s a lot of misconceptions out there for credit.

Shopping around won’t hurt your score

Clinton Wilkins 02:35
Misconception, what people don’t want you to know, you can get a credit inquiry from a mortgage lender and shop around without impacting your credit at all. One inquiry is deduped to one, if when you go to multiple places within like a 30,45 day period.

Todd Veinotte 02:51
Really? Okay, that’s automatic.

Clinton Wilkins 02:54
Mortgage lenders don’t want you to shop around. That’s why they tell you, oh, don’t go and check your credit a lot. Well, don’t go apply for a mortgage, and a car loan and a credit card and a credit card and a car loan. Yeah, that’s going to impact your credit. Yeah, yeah. But if you’re looking for a mortgage, you can technically go to other places. And it won’t have any impact on your credit. All deduped to one inquiry.

Todd Veinotte 03:15
Okay, so you said also residences or addresses. So if you’ve got a lot of addresses –

Moving and bankruptcy will raise questions from lenders

Clinton Wilkins 03:21
Yeah if you start moving a lot, that’s going to bring your score down, because guess what, people that move a lot, risky. Risky, risky business. So yeah, you changing your address a lot, certainly will have an impact. But the biggest two is the credit mix, or three, I should say credit mix, utilization, and payment history. Those are the biggest. You know also show things like collections and judgments. Or if there’s been a bankruptcy or consumer proposal that will all show on your credit bureau. And that will all have a big, big impact.

Todd Veinotte 03:50
How long will, that’s seven years is it?

Clinton Wilkins 03:52
Like a bankruptcy will stay on 6 years after discharge. And consumer proposal will stay on for 2 or 3 years after it’s discharged. But the challenge is that also the individual trade lines that may be included in a consumer proposal or bankruptcy will stay on as well. So obviously, there’s an impact. And if there’s a gap in your credit, obviously, lenders are going to ask more questions. Yeah, they’re gonna be like, well why? Tell me more.

Todd Veinotte 04:15
Yeah, so if somebody is 40 years old, and suddenly their credit –

Clinton Wilkins 04:19
And they’ve had credit for one year.

Todd Veinotte 04:21
They’re gonna wonder but –

Clinton Wilkins 04:23
Because you can see when the credit bureau was opened up, so like, if it was opened up in like, 2003, and they own and their oldest trade is one year old. There’s a problem.

Credit is an equalizer: income does not matter

Todd Veinotte 04:33
Yeah. Alright. So if somebody’s got something or anything over 700 they’re gonna be in good shape?

Clinton Wilkins 04:39
A score over 700 is good. And, you know, I think having the appropriate mix of like loans and lines of credit, good. I think some people are like obsessed with credit too like, they want to be the unicorn, they wanna have that score of 900. Then people with 900 typically have had a credit, credit bureau open for years. And they’ve had loans and they’ve had lines of credit and they have credit cards and but they’re all paid as agreed and obviously have very low balances. Those people have high scores.

Todd Veinotte 05:08
Yeah. What about income? How does that mixed in with credit?

Clinton Wilkins 05:11
No impact.

Todd Veinotte 05:12
No impact at all?

Clinton Wilkins 05:13
Income does not impact your credit. So that’s really an equalizer. And trust me, I see people with very high income that have very poor credit. And I say, I see people that have very low income with very good credit. So, you know, the one equalizer really might be the credit, you know what I mean? And I think it’s really, very, you know, g to me, like when I see people, and you see what their income is, and you assume one thing or you assume another, and oftentimes, it’s not. And I get surprised.

Never make large purchases before a mortgage closes

Todd Veinotte 05:50
Yeah. One thing that you’ve often said to people, and you said it to me, you say if you’re awaiting a mortgage to close, a house to close, do not go out and make purchases in that time right?

Clinton Wilkins 06:03
1,000%. Like, what percent can I give that will be like the maximum percent? Don’t go buy a new car. Don’t do it. Don’t do it.

Todd Veinotte 06:10
Will they find out though?

Clinton Wilkins 06:12
Everyone finds out. You know what I mean? I’ve had so many borrowers that have had to maybe make a last minute change, and it has to go back for underwriting or something like that. And we need a new credit bureau. So many times do I, magically, a new credit facility shows up. I really, truly, really, truly had a borrower that we had them approved things went a long time had to get a new credit bureau. And there was a loan from Porsche on their credit bureau.

Todd Veinotte 06:38
Wow.

Clinton Wilkins 06:39
And I’m sorry, this doesn’t work anymore. It’s like the ratios were just already high and just even higher after they got a new vehicle. So don’t buy a new vehicle. Don’t go buy furniture. Like you don’t need these things. Just wait.

Todd Veinotte 06:54
Wait until the house, well, people want the furniture, because they want to put it in the house.

Clinton Wilkins 06:58
They want the furniture to be delivered as soon as the house closes. No people, people come on. Just wait, if you can’t pay cash for that furniture, you don’t need to buy it. Don’t go get more additional credit. People are just so credit hungry, and they’re getting credit facilities from all kinds of different places. That’s not good for your credit. And it could also really negatively impact your debt servicing ratios, you know, what I mean? Like, all of these credit facilities will be factored in, especially if you have a loan payment, that’s going to make a big, big difference. And if you have any revolving debt, we use 3% of the outstanding balance for your debt servicing ratio so obviously, it certainly can have a big impact as well.

Improve your score by monitoring your credit

Todd Veinotte 07:37
What, what’s the best way for people to fix, deal with their credit if they have issues?

Clinton Wilkins 07:41
I think just be aware is the first is the is the first route know what your credit looks like know what’s on there know if there’s any, you know, miss payments or collections or any accounts that are not reporting correctly and get it fixed. Both TransUnion and Equifax have a process for consumers to fix their own credit. If consumers come to us, and I see errors on the credit bureau literally every day, we do have n investigation process where I can fix things on people’s Equifax consumer credit bureau, it does happen quite often. And there’s can be mismatches on credit bureaus and things like that. The one thing I’d also recommend if you’re going to do a credit inquiry, give the credit grantor your Social Insurance Number, that’s a really good way for them to get your credit bureau to make sure that you are you are you. I have a lot of people that have multiple credit bureaus and have to be merged together. I have different people who have wrong AKAs on the credit bureau and Equifax and TransUnion they are not reporting things to be more challenging for you, they’re only reporting the best data that they have. So you know, I would say really make sure your situation is clean. And also follow it and if there’s a problem then help and get it fixed.

Todd Veinotte 08:55
Okay, what’s the best way for people to get a hold of you? Check us out online at

Clinton Wilkins 08:59
Check us out online at teamclinton.ca/radio. Lots of great, we have hundreds of blog posts on there, we have rates on there, contact information and there’s links to our social media. You can see Todd and I on Facebook, on Instagram, on TikTok, on Twitter. Certainly send us a message if there’s anything you want us to talk about. We’d love to help, we love to answer mortgage questions. And you know, I really thank all of our listeners for tuning in.

Todd Veinotte 09:20
Yeah, absolutely. Fantastic. Clinton always great, enjoyed it as always.

Clinton Wilkins 09:24
Thanks for having me, Todd and Happy Pride, everybody.

Todd Veinotte 09:26
Happy Pride. That’s Clinton Wilkins. I’m Todd Veinotte, Mortgage 101, your guide to homeownership. Thanks so much for listening.

Clinton Wilkins 09:42
If you’ve liked what you’ve heard, and you want to learn more, feel free to visit us online at Tim clinton.ca