Your credit score will affect any mortgage refinancing loan that you are applying for, whether you reside in Canada or another country. When it comes to any type of loan, whether it is a personal loan, vehicle debt, a first home loan, or mortgage refinancing, whether you are approved or not depends on your credit score.
If you are considered a poor credit risk then the odds are that your application will get rejected, and if your loan is approved you will normally pay higher interest rates and receive other less favorable terms. If you want a mortgage refinancing loan and your credit is not great, there are some steps you can take to try and increase your credit score, and qualify for lower rates when you do try to refinance your home.
What Credit Score Is Needed For Mortgage Refinancing?
Each lender has their own specific criteria when it comes to approving or rejecting mortgage refinancing applications. There is no one set credit score number that will guarantee your approval, but the higher your score is the lower your risk is assumed to be when it comes to loans and credit applications.
A credit score that is at least 760 will give your mortgage refinancing loan application in Canada an excellent chance of approval, and anything less than a 500 or 550 has a good chance of being turned down. There are lenders who offer mortgage refinancing loans even if your credit is poor, but you will usually pay much higher interest rates for these options.
Check Your Credit Score Before Applying For Mortgage Refinancing
One of the best things you can do if you want to refinance your home mortgage is to get a copy of all three of your credit reports in Canada, and their related credit scores. This way there are no surprises when you get ready to apply for the loan. Checking your credit reports will help you evaluate whether there are any errors on them that could affect your ability to qualify for a mortgage refinancing loan.
If you find any mistakes on your credit reports that lower your credit score you can dispute them. You also have the right to have a statement of explanation added for any account that you believe is in error. When you are trying to get mortgage refinancing your credit score is crucial, so you want to make sure your credit reports are accurate and up to date. This step can save you a lot of time and money.
Possible Credit Scores In Canada And Their Effect On Mortgage Refinancing
Your credit score can range from 300 up to 900, with 300 being atrocious and 900 being perfect. If you have a credit score that is a 750 or above you are almost guaranteed approval.
- 800+- If your credit score is 800 or above, increasing this number is not necessary, and you will normally not see any better mortgage refinancing terms and rates even if you improve your score.
- Between 550 and 750- If your credit score ranges between 550 and 750 you will probably receive mortgage refinancing approval, but you may pay higher rates for this loan. The rates charged will slide, with a 550 score paying higher interest rates than a 650 score.
- Between 450 and 550- If your credit score falls between these numbers you are considered high risk. Some lenders will offer mortgage refinancing loans but they are few and you will pay significantly more.
- 300 to 450- If your credit score is 450 or less, you may not qualify for any mortgage refinancing options at all until you bring this number up some.