debt Archives - Janice Leffler

Understanding how your credit score impacts your ability to qualify for a mortgage is essential for anyone preparing to buy a home in the Comox Valley. As a trusted REALTOR® with Royal LePage, Janice Leffler has helped countless buyers and sellers navigate every step of the real estate journey — from securing financing to finding the right property. In this article, Janice shares valuable insights into how credit scores work, why they matter, and what you can do to improve yours before purchasing a home.

Much like your income and down payment, your credit score is a major financial component when qualifying for a mortgage. It’s one of the key factors lenders evaluate when you apply, making it essential to ensure your score is in good standing before starting the home-buying process.

So, what exactly is a credit score — and what sets a good one apart from a bad one?

What Is a Credit Score and Why Is It Important?

A credit score is an evaluation of how you manage and use credit, including credit cards, loans, mortgages, and other credit facilities. Many people don’t realize that this number is one of the biggest indicators lenders rely on when determining mortgage eligibility.

Your credit score can impact the interest rate you receive, as well as your ability to qualify for certain mortgage products. It carries as much weight as your income or overall affordability.

Generally speaking:

A score of 680 or higher gives you access to most mortgage products and competitive interest rates.
Scores below this threshold may limit your options.
A score of 600 or less may result in higher rates or more restrictive terms due to increased risk.

Your score reflects factors such as your payment history, available credit, and the length of time you’ve held credit accounts. Maintaining a healthy score shows lenders that you’re responsible, reliable, and capable of meeting your payment obligations — all of which influence mortgage approval and pricing.

What Factors Determine My Credit Score?

Several key elements contribute to how your credit score is calculated.

1. Payment History (35%)

Your payment history is the single most influential factor. Consistently paying debts on time is crucial. If you can’t pay off your credit card in full, make at least the minimum payment by the due date.
Collections, missed payments, or bankruptcies can significantly impact your score.

2. Credit Utilization

Avoid maxing out your credit cards. A good rule of thumb is to keep your balance at or below 30% of your credit limit. Lenders see this as a sign of responsible borrowing.

3. Credit Mix and History

Having a mix of credit types (such as credit cards, car loans, or a line of credit) can be beneficial. It shows you can manage different forms of credit responsibly.
The length of your credit history also matters — the longer your track record of timely payments, the better your score will be. Think of it like car insurance: new drivers pay more, while experienced drivers with clean records enjoy lower rates.

4. Credit Inquiries (10%)

Each time a lender checks your credit, it creates an inquiry. While too many inquiries in a short time can lower your score slightly, a single mortgage-related check has minimal impact — typically around 1% or about seven points on a 720 score.
If you’re applying for a mortgage, you shouldn’t be overly concerned about a few inquiries as part of the process.

How Can I Improve My Credit Score?

If you’re unsure how your credit looks, consult a mortgage professional early in the process. They can help you understand where you stand and suggest steps to improve your score before applying for a mortgage.

Common strategies include:

Paying down existing credit balances
Resolving accounts in collections
Avoiding new debt or multiple credit applications
Ensuring all bills are paid on time

Improving your credit takes time — scores are updated monthly, so it may take a few billing cycles to see significant improvement. If you need to move forward quickly, a mortgage professional can also help explore specialized lending options based on your current situation.

Your credit score plays a vital role in the mortgage qualification process, influencing not only approval but also the rates and products available to you. By understanding what affects your score and taking proactive steps to strengthen it, you can position yourself for better financial opportunities when purchasing a home.

This article is for information purposes only and is not legal or financial advice or a substitute for professional counsel.

Ready to Take the Next Step?

Whether you’re a first-time buyer or planning your next move in the Comox Valley, understanding your credit score is just one part of preparing for a successful home purchase. With years of experience and deep local market knowledge, Janice Leffler of Royal LePage can help connect you with trusted mortgage professionals and guide you toward homes that fit your budget and lifestyle.

If you’re thinking about buying or selling in the Comox Valley, reach out to Janice Leffler today for expert advice and personalized support every step of the way.

Buying your first home is a major milestone . It can be an exciting time, but also can be an anxious one. From mortgages and down payments, to government programs and house hunting, there’s a lot to take in. With the right tools and expertise, it is easy to understand the buying journey. The first step is to make sure you’re financially ready to purchase your first home.

When buying a home, everything comes down to your wallet. Your monthly income, debts, and credit score will determine the size of the mortgage you qualify for. This will determine what kind of home you can buy and in which location.

Here are some financial factors to consider on your path to home ownership:

Assess your fixed and variable expenses

To get a clear picture of the type of home you can afford, you need to understand your finances. Finances include net income, expenses, debts, and your credit score. First, determine your monthly income and expenses, both fixed and variable.

Monthly net income: include your after-tax, take-home income. This should include other income sources like commissions, bonuses and dividend profits.
Fixed expenses: regular, monthly expenses like rent, car loans, insurance fees, utilities, etc.
Variable expenses: these can change from month to month. They are things like groceries, gas, pet care, and discretionary spending such as dining out, concert tickets, personal care, and other lifestyle expenditures.

Calculate your debt-to-income ratio

When assessing your finances for a mortgage, a lender will consider your debt-to-income (DTI) ratio to determine your borrowing risk. The lower the percentage of your DTI, the better.

To calculate this ratio, divide your total monthly debt payments by your gross monthly income. This includes debt such as car payments, student loans, rent and utilities. If your DTI ratio is above 50%, you may need to take steps to lower your debts and expenses to improve your ratio.

Conduct a credit score check

A solid credit score is vital for first-time homebuyers. Usually, a score above 660 is good. It will improve your odds of accessing your preferred mortgage products. A score above 760 is ideal, giving you the best offers and credits available.

By checking your credit score before pursuing a mortgage loan, you can assess what areas may be helping or hurting your score. A missed payment or outstanding balance could make a difference.

Understand a pre-qualification vs. pre-approval

Before you get your heart set on a home, it’s important to differentiate between a mortgage pre-qualification and a pre-approval. Essentially, pre-qualification is a general estimate of your finances. It will show the ballpark range of a mortgage and interest rate you would qualify for today. This can help you to narrow down your home search to property within your price range. A pre-approval is an official assessment by a lender. It will show you the actual mortgage size and rates available to you.

Determine your down payment and closing costs

Sale price and mortgage payments are the obvious costs. There are other visible and hidden expenses that you need to consider when it comes to buying a home. Down payments and closing costs are the main two.

Minimum down payment requirements: Your down payment can range from as little as 5% to more than 20%. It will depend on how much you have available to put down. Any homes purchased over $1 million in Canada require a minimum 20% down payment. Homes purchased with less than 20% down will require mortgage insurance.
Closing costs and fees: You should estimate that closing costs will equal approximately 3-4% of the purchase price. Legal fees and land transfer tax are included in this percentage. Additional costs such as those related to moving, inspection, etc. you should prepare for in advance.

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Credit Scores: What Are They and What Affects Them?