The 'Good Credit Required' Myth
If your credit score is below 680, you've likely heard from your bank: 'We can't help you.' What your banker didn't add: major banks represent only a fraction of available lenders in Quebec. The Canadian mortgage market includes A-lenders (major banks), B-lenders (alternative lenders), and private lenders — each with very different qualification criteria.
Being declined by your bank does not mean being declined by the market.
What Your Credit Score Actually Means to Lenders
Here's how Quebec lenders segment borrowers by credit score:
- 680+ — A-Tier: Access to major banks (RBC, TD, Scotiabank, National Bank). Best available rates. Strict on income, down payment, and employment history.
- 620–679 — A/B Boundary: Some banks accept with compensating factors (larger down payment, stable income). Monoline lenders like First National or MCAP may be more flexible.
- 560–619 — B-Tier: Alternative lenders (Equitable Bank, Home Trust, B2B Bank) specialize in these files. Rates typically 0.5% to 1.5% higher than A-tier, but homeownership is achievable.
- Below 560 — Private: Private lenders base decisions on property equity and income stability, not credit score alone. Rates are higher, but with a clear exit plan to conventional financing, this is a viable bridge.
What Damages Credit — and How to Rebuild It
Understanding why your score is low is the first step to fixing it:
- Late payments: A single payment 30 days late can drop your score 50 to 100 points. Lenders scrutinize the last 24 months closely.
- High utilization: Using more than 30% of your credit limit hurts your score. Paying balances below 30% can add 20 to 40 points within 1-2 billing cycles.
- Thin credit file: Limited credit history — not just bad credit — can restrict your access. A secured credit card used responsibly rebuilds quickly.
- Bankruptcy or consumer proposal: These stay on your file 6 to 7 years. After discharge, many B-lenders will accept your file after 2 years of rebuilding.
- Credit bureau errors: Request your free Equifax and TransUnion reports annually. Errors are more common than people realize and can unfairly suppress your score.
The Short-Term Strategy — Qualifying Now
If you need financing now despite bruised credit, here are the levers available:
- Increase your down payment: 20% or more opens access to more lenders and eliminates CMHC insurance requirements. For private lenders, 25-35% is often required.
- Add a co-borrower: A spouse, parent, or trusted friend with strong credit can co-sign. Lenders use the higher score or a combination, depending on their policy.
- Demonstrate stable income: Even with bruised credit, 2 years of stable, documented income (T4s, notices of assessment) partially compensates. Avoid job changes in the 6 months before an application.
- Settle outstanding collections: If you have accounts in collections or judgments, resolving them before applying can quickly improve your profile.
Private Lending — Bridge, Not Destination
Private lending is often misunderstood. It's not a last resort — it's a transitional tool for homeowners or buyers whose file isn't yet ready for conventional financing.
Short duration: Private loans are typically 1-year terms, renewable. The goal is to rebuild during this period and refinance into conventional financing at term end.
Exit plan required: Before committing to any private lender, establish a clear plan: what must change in your file to access conventional financing in 12 months?
Understand total costs: Private loans carry brokerage fees, administration fees, and higher rates. A good broker presents the total 12-month cost — not just the monthly rate — so the decision is fully informed.
Your Bank Is Not Your Only Option
Bad credit isn't a mortgage death sentence — it's a file that requires the right lender, at the right time, with the right strategy. At Mortgage Solution, we regularly work with clients banks turned away who are homeowners today.
Book a free consultation. We review your situation together, without judgment, and tell you exactly what's possible for you right now.
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These strategies are even more powerful when tailored to your specific situation. Let's talk about your project.