If you are planning to buy a home in the future, your credit profile matters just as much as your income and down payment. As a Mortgage Broker in Lethbridge working with clients across Alberta, one of the most common issues I see is not bad credit, but insufficient credit.
Yes, having some debt is actually a good thing when it comes to qualifying for a mortgage.
What Lenders and Mortgage Insurers Look For
Banks and mortgage insurers want to see that you can handle credit responsibly over time. A single small credit card or a phone bill does not show enough credit behavior.
They want to see:
• Multiple credit accounts
• Meaningful credit limits
• A proven repayment history
This helps them assess risk and determine whether you are likely to manage a mortgage payment successfully.
The 222 Rule Explained
I use something called the 222 Rule to keep things simple for clients.
The ideal credit setup includes:
• 2 credit lines
• $2,000 or more limit on each
• 2 years or more of history
These credit lines can include:
• Credit cards
• Lines of credit
• Student loans
• Auto loans
You do not need to carry balances or rack up debt. You just need access to the credit and to demonstrate responsible use.
Do You Need All Three Parts of the 222 Rule?
In most cases, lenders and mortgage insurers are okay if you meet 2 out of the 3 requirements. That said, I always recommend aiming for all three whenever possible. Strong credit gives you:
• More lender options
• Better interest rates
• Smoother approvals
• Less stress during the buying process
Credit Utilization Matters
One of the biggest mistakes I see is high balances relative to limits.
Even if you pay your credit cards off every month, you should:
• Keep balances under 50% of the limit
• Avoid maxing out cards or lines of credit
• Spread spending across accounts if needed
Credit utilization has a major impact on your score and lender perception.
Start Early, Even If You Are Not Buying Yet
If you are 18 or 19 and not planning to buy a home anytime soon, this is actually the best time to start building credit properly. Establishing good credit early means:
• No rushing later
• No last-minute fixes
• Better mortgage terms when the time comes
Need Help Reviewing Your Credit?
Every situation is different. If you are unsure whether your credit setup will work for a mortgage, I am happy to review it and help you plan ahead.
Dillan Kelly
Mortgage Broker
Dominion Lending Centres Mortgage Excellence
📞 403-894-5818
📧 dillan@dlcme.ca
Serving Lethbridge and all of Alberta.
