Maxed out cards could be blocking your next mortgage - here's why
The Bank of Canada may have kept rates steady in July, as the Bank of Canada opted for another rate hold, but for many Canadians, high borrowing costs are still hitting hard. One growing trend we’re seeing is more people carrying credit card balances for longer.
Even if you’re making payments on time, those balances could be quietly lowering your credit score—and that can mean fewer mortgage options, higher rates, or even a declined application
What lenders are really watching
When reviewing applications, lenders look closely at credit scores. One major factor is credit utilization—the percentage of your available credit you’re using. If your balance is regularly above 50% of your limit, your score could take a hit, even if you’ve never missed a payment.
As credit expert Richard Moxley puts it: “If the balance is caught at over 50% of the limit, it will dramatically lower your score.” In fact, he warns that just one maxed-out credit card can drop your score by 30 points or more. That kind of drop can seriously affect what lenders are willing to offer—or if they’ll approve you at all.
Minimum payments, maximum credit healthPaying only the minimum keeps your account in good standing, but it won’t lower your debt or raise your score. With many credit cards charging 20% interest or more, balances can snowball quickly.
Use your mortgage to take back control
Here’s the good news: if you’re a homeowner with some equity built up, you may have options. Refinancing your mortgage to consolidate high-interest debt can:
- lower your monthly payments
- free up cash flow
- improve your credit score within a few months
It’s not the right move for everyone, but for the right situation, it can be a game-changer.
Ready for a credit check-up?
If you’re not sure where you stand or just want to make sure your credit isn’t getting in the way of your next big move, let’s chat. We can help you understand your options and see what strategy fits you best.