1

I would like to understand how to model to evaluate if credit score is different in Canada from the USA.

I just finished paying some debt on a 0% credit card and I have no more use of this card (and another one). Both the card are my newest. Closing those two card would kill more than half my limit in cc but I don't really care since I use use 100-400 per month on a limit that would be around 5500$.

I have frequently heard people telling that having high limit in credit card is a liability (even if you don't use it) when you come to apply for a loan (mortgage, auto loan, etc.). Is it true that having a limit in cc can reduce your chance of securing a mortgage in Canada?

1

According to the Equifax Canada:

Here are the top, most common negative score factors. Note that the specific wording given by your lender may be different:

  • Serious delinquency
  • Serious delinquency, and public record or collection field
  • Time since delinquency is too recent or unknown
  • Level of delinquency on accounts is too high
  • Number of accounts with delinquency is too high
  • Amount owed too high on accounts
  • Ratio of balances to credit limits on revolving accounts is too high
  • Length of time accounts has been established is too short
  • Too many accounts with balances

According to the Canadian Financial Consumer Agency:

Don't go over your credit limit. Use only a percentage of your available credit. Try to use less than 35% of your available credit.

Therefore, it is not necessarily having a limit on a credit card (everyone has a "limit" in terms of credit lines), it is more important that you manage that limit and don't overuse your credit. However, each bank does have a different process in viewing your application. Your realtor should have contact with various lenders that can answer specifics.

  • Thank you! do you know if there are ratio (approximation) to know what a reasonable limit is for most lender? Currently my ratio CC/income is 29%. I won't shop for a mortgage before a year. So in the time I would like to boost my score if I can. – Rémi Jun 4 '17 at 16:13
  • Please see my updated answer regarding the ratio of credit debt to limit. As for an income, that would depend on the bank as well as the amount you want to borrow. – Michael Jun 4 '17 at 16:15

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .