Looking to buy a house in Canada?

Before applying for a mortgage pre-approval, you should check your credit score in order to ensure you can be approved for a mortgage in the first place. The bottom line is, the lower your credit score is, the more consequences you're likely to experience. This is why, even if it may take longer than expected, you may want to hold off on buying a house until your low credit score is resolved and we'll get into why below.

Credit score ranges

Having bad credit can not only make it difficult to obtain a mortgage loan, but it can also raise the amount of interest you pay on a loan. Poor credit can deem you a "high-risk lender" by financial institutions if you seem more likely to default on mortgage payments.

In Canada, this is what your credit score can mean (as it will vary per lender):

Poor (300-574)

You may not actually get approved for a mortgage by a traditional lender with a poor credit score, however, every lender will have a different set of requirements. If a lender does approve you, your interest rate will be much higher and if you default on too many mortgage payments, you could lose your home. And it's not just getting a mortgage that will be an issue. You'll also find it difficult to get approved for lines of credit or other personal loans.

Continue to read on: Canadian Real Estate Wealth