How to Fix Your Credit for a Mortgage in Canada: 36–48 Month Plan
When you’re working toward homeownership—especially through Rent-to-Own—credit is a key ingredient. This post shows you how to fic your credit so you can get mortgage qualified. You don’t need perfect credit to succeed, but you do need a score and credit profile that gives lenders confidence you can manage a mortgage.
The good news?
You can rebuild.
And with a structured plan, most people see meaningful improvements within 36-48 months.
Let us show you how to get started.
Why Credit Matters for Mortgage Approval
Lenders don’t approve mortgages based on one number—they look at patterns. They want to see:
-
How you use your credit
-
Whether you pay consistently
-
How much you owe
-
Whether you’re overextended (use too much credit compared to your income)
-
Whether any major issues (collections, consumer proposals, late payments) are improving
A strong credit profile tells lenders:
✔ You’re dependable
✔ You’re responsible with money
✔ You’re likely to repay your mortgage without issues
And when you’re in a Rent-to-Own program, improving your credit is one of the most important steps you can take to ensure you’re ready for your mortgage approval at the end of your term.
Let’s walk through the exact plan.
Step 1: Lower Your Credit Utilization
Credit utilization is one of the biggest factors in your credit score.
It’s the percentage of your available credit that you’re currently using.
Example:
If you have a $5,000 limit and a $4,000 balance, your utilization is 80%—and that hurts your score significantly.
Target:
Keep your utilization under 30% on every revolving account.
How to lower your utilization:
-
Make lump-sum payments toward credit cards or lines of credit
-
Ask your lender for a credit limit increase (without doing a hard check)
-
Spread balances across multiple cards instead of maxing out one
-
Avoid closing accounts with available credit
Why it matters:
High utilization signals financial stress. Lower utilization signals control and confidence—exactly what lenders want to see.
Step 2: Remove Errors From Your Credit Report
Errors happen more often than people realize—especially after job changes, moves, separations, or consumer proposals.
These mistakes can artificially lower your score.
What to look for:
-
Incorrect late payments
-
Accounts showing as open that should be closed
-
Duplicated accounts
-
Incorrect balances
-
Old collections that were paid but not cleared from your credit report
-
Incorrect personal information
How to fix errors:
-
Pull full credit reports from both Equifax and TransUnion
-
Highlight every incorrect item
-
File a dispute with the bureau (simple forms online)
-
Follow up every 30 days until resolved
Why it matters:
Removing even one major error can boost your score dramatically.
Step 3: Add New Positive Tradelines
If your credit history is thin—or if you’re coming out of a consumer proposal—you may not have enough active credit to generate a strong score.
Lenders want to see at least two active tradelines (credit cards, secured loans, lines of credit) reporting positively.
The best tradelines for rebuilding:
-
A secured credit card (very effective post-proposal). This is where you put money on the card and spend it like a debit card except is goes a long way to helping rebuild credit or establish new credit.
-
A low-limit unsecured card ($1,000–$2,000). The interest rate should not matter as much since the goal would be to use this card like a debit card for things like gas, groceries etc. but instead of carrying the balance, you would pay this off right away.
-
A credit builder loan from your local credit union
-
A store card with a small limit
What lenders want to see:
-
24 months of on-time payments
-
Low balances
-
Consistent usage
-
No missed or late payments
Why it matters:
You’re not just fixing your score—you’re building a payment history that lenders can depend on.
Step 4: Build a Stable Payment History
Payment history is the #1 influence on your credit score.
Even one late payment can drop a score by 50–100 points.
How to strengthen your history:
-
Set up automatic minimum payments on every account
-
Use your cards monthly (small amounts only)
-
Pay on time—every time
-
Keep balances predictable, not swinging wildly
What lenders want:
A full year (ideally two years) of clean payment history.
Why it matters:
A stable history shows financial maturity. Lenders love predictability.
Step 5: What NOT to Do (This Is Where Most People Slip)
Improving your credit is as much about what you avoid as what you do.
Here’s what to stay away from:
1. Don’t apply for too much new credit
Each hard check lowers your score temporarily.
2. Don’t max out cards
Even if you pay them off later, maxing out sends the wrong message.
3. Don’t close older accounts
Older accounts help anchor your credit history.
4. Don’t co-sign for anyone
If they miss a payment, your chances at mortgage approval take a big hit.
5. Don’t ignore collections
Unresolved collections can block mortgage approval completely.
Final Thoughts: Your Credit Can Recover—Faster Than You Think
Fixing your credit isn’t about perfection—it’s about direction. Lenders want to see progress, discipline, and responsibility.
And when you follow a clear 12–24 month plan like this one, most people see their score improve faster than they expected.
If you’re working toward Rent-to-Own or preparing for a mortgage, this is your roadmap. And you don’t have to figure it out alone.
Ready to See if You’re on Track for Mortgage Approval?
If you want a clear step-by-step plan for your specific situation, we can walk you through:
-
What lenders will expect
-
What timeline makes sense for you
-
How Rent-to-Own can help you buy a home now while you rebuild
Book your Homeowner Planning Call and get clarity on your next steps.
