There’s more to a credit report than a score.

You can have good income and a 700 credit score (which is about average) and still not qualify for a mortgage.  The reason is that lenders generally look for one key factor: repayment history.

Suppose, for example, that you have a 710 credit score but only one credit account. Worse yet, that one account is a credit card that you’ve had for only two months.  Before that, you’ve had either no credit or bad credit (most likely, any bad credit would be from a few years ago, given your score).

In this case, your 710 score may not get the job done.

Lenders often want to see a minimum of 1-2 years of satisfactory payment history and at least two “trade lines” (loans or revolving credit accounts).  A trade line can consist of a major credit card with a $1,500+ limit (a rough rule of thumb), a revolving credit line, a reported lease, or an instalment loan (like a vehicle or investment loan).

So, if you have no credit and you hope to apply for a mortgage, start building credit pronto.  Get a credit card (even if it’s secured), a small instalment loan, a Futureshop card, whatever.  And don’t ever make a late payment.  Many lenders require squeaky clean repayment history for at least 1-2 years.

Of course, there are lots of exceptions to the above–including cases where a co-signor or alternative credit can make up for traditional repayment history.  (As noted in CMHC’s Newcomer program, “Alternative credit” can include things like proof of satisfactory rent payments and utility payments for 12 months).  Keep in mind, however, that alternative credit is an exception and not a rule.

Speak with a mortgage professional if you have questions about your own unique circumstances.