How to Get Approved for a Mortgage Loan with Bad Credit

Having a bad credit score can make it challenging to get approved for a mortgage, but it’s not impossible. This guide provides a step-by-step strategy to improve your chances of getting a mortgage approval with bad credit.

1. Understand Your Credit Score

First, understand what a credit score is and how it impacts your ability to get a mortgage. In Canada, credit scores range from 300 to 900. A score of 600 or above is typically needed for a conventional mortgage.

2. Check Your Credit Report

Before applying for a mortgage, request a free copy of your credit report from credit bureaus such as Equifax or TransUnion. Check it for errors or discrepancies, as these can negatively impact your score.

3. Repair Your Credit

Start taking steps to repair your credit. This can involve paying down debts, paying bills on time, and not applying for new credit unless necessary. It might take time, but improving your credit score can increase your chances of mortgage approval.

4. Save for a Larger Down Payment

A larger down payment can increase your chances of mortgage approval because it reduces the lender’s risk. It also decreases your loan-to-value ratio, which could lead to more favorable loan terms.

5. Consider a Co-Signer

If you’re struggling to get approved due to poor credit, you might want to consider getting a co-signer. This is someone with good credit who agrees to take responsibility for the loan if you default. This can make lenders more willing to approve your application.

6. Look for Alternative Lenders

If traditional lenders reject your mortgage application due to bad credit, consider alternative lenders like credit unions or private lenders. These lenders often have more flexible criteria but may charge higher interest rates.

7. Consider a Bad Credit Mortgage

Some lenders offer mortgages specifically for borrowers with bad credit. These “subprime” mortgages often come with higher interest rates and fees but can be an option if you’re struggling to get approved elsewhere.

8. Demonstrate a Stable Income

Being able to show a stable income can make lenders more confident in your ability to make mortgage payments. This is particularly important if you have bad credit.

9. Minimize Debt

Reducing your existing debt can help improve your debt-to-income ratio, a key factor lenders consider. Try to pay down credit cards and other loans as much as possible before applying for a mortgage.

10. Consult with a Mortgage Broker

Consulting with a mortgage broker like Shelto can help you navigate the mortgage application process with bad credit. Brokers can provide advice, help you find lenders, and negotiate on your behalf.


In conclusion, while getting approved for a mortgage with bad credit can be challenging, it’s not impossible. It involves understanding your credit, taking steps to repair it, considering alternative options, and potentially working with a mortgage broker. Remember, the team at Shelto is always here to help guide you through this process and help you find the best possible mortgage for your circumstances.

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