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How Is My Credit Score Calculated?

August 10, 2015

Just now in the mortgage world, credit score has risen amongst the lenders to become the most important factor in a mortgage application. This wasn’t always the case (and in some applications still isn’t) but generally speaking a mortgage is about credit score, income and debt levels.

However, many people are always confused when it comes to their credit score. What is it? What does it include? How is my credit score calculated? These are all great questions that I will answer for you!


Having a great credit score can save you thousands of dollars, if you know how to manage it. There are two main agencies in Canada that report credit scores: Equifax and TransUnion. Both of these agencies collect information on a daily basis from millions of people through consumer credit agencies including phone companies, mortgage lenders, banks, credit card companies, and independent lenders.

Both of these companies analyze all the data they receive and use it to determine each individual’s credit score. To get a well-rounded credit score, it is most beneficial to have two active trade lines in addition to a mortgage and cell phone plan.


Your credit score is determined by looking at (and weighing) several factors. The percentages indicate how important a factor this is on a scale of 1 to 100.

1. 35% Payment History
This portion looks at your payment deadlines and if you pay on time every month. The score from this section remains positive as long as you maintain set payments on fixed loans and always make at least the minimum payment on credit cards. This information is kept on file for 7 years from the date of last activity.

2. 30% Utilization
This portion looks at the amount you use on your available lines of credit and credit cards. Ideally you do not surpass the 50% point on any of them and do not need to apply for high credit limits, both being red flags for financial trouble.

3. 15% Length of Credit History
For all financial lenders, a clear history for at least two years is the most favorable situation to show your security. This proves to the lender that you are a low risk applicant.

4. 10% Credit Mix
The credit mix looks at your current loans and credit cards you use. Ideally, having at least one credit card with a $2500 limit and a fixed loan (i.e. house or vehicle) allows the lender to see your level of responsibility on different credit sources to base your score on.

5. 10% Number of Inquires
This can be an area of concern if you frequently inquire about credit opportunities. If you apply for multiple credit cards, an overdraft on a bank account, and/or a line of credit it can be a red flag that you are experiencing difficulties. If you are just looking for a new method of credit do not worry as your score will only take a minor, temporary hit. If, however, you are constantly inquiring about credit options then your credit score will take a dive.

To learn about the status of your credit score you can write to either Equifax or TransUnion for a free copy at any time. Writing to them will take a few weeks, so if you are strapped for time you can check out a website that will charge you a fee to see your credit report immediately.

If you have any questions about credit scores contact us at GTA Mortgage Pros and we can guide you through it!

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