Before you start shopping around for a mortgage, you should order a copy of your credit report to make sure it does not contain any errors. A credit report is a summary of your financial history. It shows your previous and current debts, and whether or not you've had any problems in the past paying off those debts.
A potential lender will look at a copy of your report before approving you for a mortgage loan, so it is important that your report be accurate. You can order a copy of your credit report for free by mail, fax, telephone or in person from the two major credit reporting agencies in Canada: Equifax Canada and TransUnion Canada.
You can ask the credit reporting agencies to correct any errors you find on your credit report. It may take some time to look into and resolve any errors, so check your report at least three months before you plan to start shopping around for a mortgage.
A lender will also want to check your credit score, which is a three-digit number that shows your likeliness to pay off future debts. The score is based on the information in your credit report. The lender may use the credit score provided by the credit reporting agency, or may use its own formula to calculate your score, based on the information in your credit report. As a result, if you order your credit score, the number you receive could be different from the one the lender is using, but they should generally be in the same range.
If you do not have a good credit score, the mortgage lender could refuse to approve your mortgage, or may decide to approve it for a lower amount, and/or a higher interest rate. Some lenders may only consider your application if you have a large down payment, or if you have someone co-signing with you on the mortgage.
To find out how to get a copy of your credit report, what it contains and how to correct errors in your report, see Understanding Your Credit Report and Credit Score.