Credit score & history
Your credit score decides which lenders will even look at your file and what rate they'll offer, sorting borrowers into banks, alternative lenders, and private lenders.
In Canada your credit score runs from 300 to 900, and lenders read it as a shorthand for how likely you are to miss a payment. It's built from your payment history, how much of your available credit you're using, how long your accounts have been open, and how often you apply for new credit. Two agencies, Equifax and TransUnion, each calculate a score, and they don't always match, so a lender may pull one, the other, or both.
Where your score lands sorts you into a lender tier. "A lenders" (the big banks and most credit unions) want to see roughly 680 or higher for their advertised rates, though some will work with a score near 660 if the rest of your file is strong: bigger down payment, low debt load, steady income. If your down payment is under 20% you'll need mortgage default insurance (from CMHC, Sagen, or Canada Guaranty), and that requires at least one borrower to hit a minimum score of 600, lowered from 680 back in July 2021. "B lenders" (alternative or subprime lenders) generally take scores from about 500 to 680, but they charge higher rates and often a lender fee to offset the added risk. Below that, you're usually looking at a private lender, which means a larger down payment and rates well above bank pricing.
The rate gap between tiers is real money. A borrower who slips from an A lender to a B lender can pay one to two percentage points more, which on a typical mortgage runs into thousands of dollars a year in extra interest. The score itself is only part of the picture, lenders also read the actual history behind it: a recent missed payment, a collection, or a maxed-out credit card can matter more than the three-digit number suggests.
One practical note the industry rarely volunteers: your score is a snapshot, not a verdict. It moves. Paying down a balance so you're using less of your available credit, or clearing a reported error, can shift your score within a billing cycle or two, sometimes enough to cross a tier boundary before you apply.