Securing a mortgage is a significant milestone on the path to homeownership, and your credit score plays a vital role in this journey. If you’re considering Toronto-Dominion (TD) Bank for your mortgage in Canada, you’re likely wondering what credit score you need to get approved.
While TD doesn’t publish a single, official minimum credit score, understanding the factors that influence their decision can help you prepare your application. This guide will walk you through the credit score requirements for a TD mortgage in Canada, explain how your score impacts your application, and offer tips to improve your chances of approval.
What is a Good Credit Score for a Mortgage in Canada?
Before focusing specifically on TD, it’s helpful to understand the general credit score landscape in Canada. Credit scores range from 300 to 900 and are calculated by credit bureaus like Equifax and TransUnion.
Lenders use this three-digit number to assess your creditworthiness—in other words, how likely you are to repay your debts.
Here’s a general breakdown of credit score ranges:
- 760-900 (Excellent): You are a low-risk borrower and will likely qualify for the best interest rates.
- 725-759 (Very Good): You have a strong credit history and a high chance of mortgage approval with favorable rates.
- 660-724 (Good): This is the range where most Canadians fall. You are likely to be approved for a mortgage, though perhaps not at the lowest possible rates.
- 560-659 (Fair): You may have some difficulty securing a mortgage from a major bank. You might need a larger down payment or a co-signer. Alternative lenders may be an option.
- 300-559 (Poor): It is very challenging to get a mortgage from a traditional lender with a score in this range.
TD Mortgage Credit Score Requirements
TD Bank, like other major Canadian banks, generally prefers applicants with a credit score of 660 or higher. A score in this “good” range demonstrates a consistent history of managing debt responsibly.
Having a score above this threshold significantly increases your chances of getting approved for a TD mortgage and securing competitive interest rates.
Can You Get a TD Mortgage with a Score Below 660?
While 660 is a good benchmark, it is not an impossible cutoff. TD may consider applications from individuals with scores in the “fair” range (typically 600-659).
However, these applications are assessed on a case-by-case basis and will face greater scrutiny.
If your credit score is below 660, TD will look for compensating factors to offset the perceived risk. These may include:
- A stable, high income.
- A low debt-to-income ratio.
- A substantial down payment (often more than the 20% required for an uninsured mortgage).
- A long history of employment with the same employer.
- A significant amount of savings and other assets.
For applicants with a credit score below 600, securing a mortgage directly from TD becomes very difficult. These borrowers may need to explore options with alternative lenders or credit unions, which often have more flexible criteria.
How Your Credit Score Influences Your Mortgage
Your credit score is more than just a number for approval; it directly impacts the terms of your mortgage offer.
Interest Rates
A higher credit score signals to lenders that you are a reliable borrower. To compete for your business, they will offer you their most attractive interest rates. A lower score, on the other hand, represents higher risk, which lenders balance by charging a higher interest rate.
Even a small difference in your rate can add up to tens of thousands of dollars over the life of your mortgage.
Mortgage Insurance
If your down payment is less than 20% of the home’s purchase price, you are required to have mortgage default insurance from providers like the Canada Mortgage and Housing Corporation (CMHC).
While lenders make the final decision, these insurers also have their own credit score requirements. CMHC, for example, requires at least one applicant to have a credit score of 600 or higher.
How to Improve Your Credit Score for a Mortgage
If your credit score isn’t where you want it to be, don’t worry. You can take concrete steps to improve it before applying for a mortgage.
1. Pay Your Bills on Time
Payment history is the most significant factor in your credit score. Always pay your bills—including credit cards, loans, and utilities—on or before the due date. Even a single late payment can negatively affect your score.
2. Keep Credit Card Balances Low
Your credit utilization ratio, which is the amount of credit you use compared to your total available credit, is another key factor.
Aim to keep your balances below 30% of your credit limit on each card. For example, if you have a credit card with a $10,000 limit, try to keep the balance under $3,000.
3. Review Your Credit Report Regularly
You are entitled to a free copy of your credit report from Equifax and TransUnion each year. Review it carefully to check for errors, such as incorrect personal information or accounts you don’t recognize. Disputing and correcting inaccuracies can give your score a quick boost.
4. Limit New Credit Applications
Every time you apply for new credit, a “hard inquiry” is recorded on your report, which can temporarily lower your score. Avoid applying for multiple new credit cards or loans in the months leading up to your mortgage application.
Your Next Steps to a TD Mortgage!
While there’s no single magic number, aiming for a credit score of 660 or higher will put you in a strong position to get approved for a mortgage with TD Bank.
If your score is lower, focusing on building a stronger financial profile through a larger down payment and a low debt-to-income ratio can improve your chances.
Taking the time to understand and improve your credit score is one of the most powerful steps you can take toward achieving your dream of homeownership!