This is a very common question asked by many of our clients. The interesting answer is that mortgages do not, for the most part, affect your credit score. When qualifying for a mortgage, many banks and institutions will factor in your credit score, the outstanding debts that you have and payment history in order to make a decision with respect your approval. Lenders want to insure that you are able to financially service the sum of all your debts on a regular basis without overloading your income to do so.
The interesting thing is that mortgages are not usually reflected on the credit report, mainly due to the fact that it may hinder your ability to apply for future unsecured credit or loans. Since servicing mortgages are usually the single highest forms of debt and financial obligation, reporting them in the same way as other debts would most likely prevent you from receiving any more credit.
It is worth mentioning that this is not guaranteed and that there are other examples where the institutions would in fact report your mortgage to the credit bureaus. In our experience, when it comes to home equity lines of credit (HELOC), they are almost always reported and in turn, affect your credit standing. Remember, HELOC’s are a type of mortgage, and although it is revolving like most lines of credit, it is also secure to the home. Mortgages may also be shown on your credit bureau if you are continuously in arrears or in a power of sale (foreclosure) situation.
For the most part, credit bureaus report unsecured credit cards and other types of loans. If you have any questions or would like to learn more, please contact Canadian Mortgage Services today!