As Canadian homeowners over the age of 55 seek optimal retirement strategies, reverse mortgages are making headlines. According to research by DBRS, reverse mortgages have become very popular with older homeowners. If you are thinking of getting a reverse mortgage, then its important for you to understand how your credit score will affect your application.

If you want a complete understanding of reverse mortgages, and how they are benefiting Canadian homeowners over the age of 55, you should read our comprehensive Guide to Reverse Mortgages.

What is a Credit Score?

In the world of finance, a credit score is a numerical assessment that represents an individual's creditworthiness. It's a three-digit score that reflects the health of your credit, derived from a comprehensive review of your credit history. 

Various factors, such as your payment history, the types and amount of credit you have, the length of your credit history, and the amount of debt you owe, play a crucial role in determining this score.

The Role and Impact of Credit Scores in Financial Decisions

Credit scores hold a pivotal role in our financial decisions and lifestyle. From securing a loan, obtaining a credit card, to leasing a vehicle or apartment, a good credit score can significantly enhance your financial flexibility. 

Conversely, a lower credit score could limit your options, potentially leading to higher interest rates or loan application rejections. Maintaining good credit health for seniors, hence, is not just a suggestion; it's a necessity if they are going to be applying for loans.

The Importance of Credit Scores in Mortgage Applications

When it comes to mortgage applications, your credit score essentially stands as your financial resume. It's a key factor that lenders, including banks and mortgage brokers, use to gauge your capability of repaying the loan. 

As per Statistics Canada, a significant majority of Canadian families held some form of debt in 2019, making credit scores a pivotal factor in mortgage applications, including reverse mortgages. 

A higher credit score can unlock better mortgage terms and potentially lower interest rates, aiding effective debt management in retirement.

Understanding Reverse Mortgages

Among various mortgage options for seniors, reverse mortgages are witnessing growing interest. A reverse mortgage is a loan product that enables homeowners to tap into their home's equity without the need to sell or move. It has specific credit requirements for reverse mortgage and demands that the home remain your primary residence.

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Contrary to traditional mortgages that require monthly payments, a reverse mortgage works in reverse—pun intended. The lender pays you, either through a lump sum, regular payments, or a line of credit, and the loan amount doesn't need to be repaid until you sell the home or no longer live there. Reverse mortgages offer a unique financial planning tool for seniors, allowing them to utilize their home equity while still retaining homeownership.

However, like any other financial product, reverse mortgages come with certain qualifications, one of which is your credit score. But how much impact does your credit score have on your reverse mortgage eligibility? 

Credit Score Requirements for Reverse Mortgages

Like other financial products, reverse mortgages have specific requirements concerning credit scores. However, these requirements can vary significantly between different reverse mortgage lenders. Generally, lenders will look at a credit score to assess your history of borrowing and repaying, providing insight into your financial habits. 

While there is no set-in-stone 'credit score for reverse mortgage', lenders typically prefer a good credit history, which serves as an assurance of your financial responsibility.

The Role of Credit in Qualifying for a Reverse Mortgage

While credit score plays a role in the reverse mortgage approval process, it's important to note that it's not as big a factor as it is with traditional mortgages. Lenders will approve you for a reverse mortgage if you have “bad” credit or even previously filed for bankruptcy.  Aside from a review of your overall credit, reverse mortgage lenders will also look at your overall financial picture, including your income, assets, and especially the amount of equity in your home. 

Thus, even if your credit score is not perfect, other factors might help you qualify for a reverse mortgage. Nevertheless, good credit health should be a priority for all seniors.

Myths and Misconceptions about Reverse Mortgages

Like anything that is different or less familiar, reverse mortgages are often the subject of various myths and misconceptions. 

One common myth is that the bank will own your home. In reality, homeowners retain the title to their homes, and the loan does not have to be repaid until they sell, move, or pass away. 

Another myth is that your family will be left with the debt. In reality, reverse mortgage lenders can only claim the amount of the loan balance and cannot seek repayment from your family or from other assets.

There are many more myths about reverse mortgages.  We’ve debunked them all so you can rest assured that reverse mortgages are a safe option for retired homeowners in Canada.

Comparing Reverse Mortgages to HELOCs and Traditional Mortgages

When it comes to tapping into your home's equity, reverse mortgages are not the only game in town. Home Equity Lines of Credit (HELOCs) and traditional mortgages also offer options and many retired homeowners gravitate towards them.  While these options should be considered, we don’t think they are the best option for everyone, especially those retired homeowners on a fixed pension.

If you’re not sure which loan option is best for you, you can read our comparison of HELOCs and reverse mortgage.  

Lenders Providing Reverse Mortgages in Canada

In Canada, several lenders offer reverse mortgages, each with their own set of terms, rates, and eligibility criteria. HomeEquity Bank and Equitable Bank are among the most recognized due to their substantial marketing efforts. There are other, less known, reverse mortgage lenders in Canada.

Regardless of which lender you are considering, it's crucial to understand that the best choice for you depends on your unique circumstances and requirements.

How RetireBetter Can Help You Obtain a Reverse Mortgage

RetireBetter, with its comprehensive understanding of the Canadian reverse mortgage market, can guide you through the entire process so that it is stress-free for you. Our expertise can help you navigate the credit requirements for reverse mortgages, bust prevalent myths, and compare the available options so you work with the best lender for your circumstances. 

We understand you may have many questions about reverse mortgages, and how it will impact your family when you pass away.  Having completed more reverse mortgages in Canada than any other mortgage company, we’re confident we can answer all of your questions and make you feel comfortable with the entire process.


Whether you are considering a reverse mortgage or just exploring your mortgage options for seniors, understanding your credit score's role in the process is crucial. Your credit score is just one piece of the puzzle. Other factors, like your income and home equity, also play a significant role in your eligibility for a reverse mortgage. 

Whether you have excellent credit or bad credit, we can help you get a reverse mortgage so you can live your retirement comfortably with financial independence and dignity. If you're ready to explore the possibilities of reverse mortgages, contact RetireBetter. We're here to make your dream retirement a reality.

FAQ Section

Q1: What is a credit score and why is it important for obtaining a reverse mortgage?  

A. A credit score is a numerical representation of your creditworthiness based on your financial history. Lenders use credit scores to determine the likelihood that you will repay borrowed money. For reverse mortgages, a good credit score might offer better terms and conditions but bad credit will not disqualify you from getting a reverse mortgage.

Q2: What is a reverse mortgage?

A. A reverse mortgage is a type of loan that allows homeowners over the age of 55 to convert part of their home equity into tax-free cash, without having to sell or move from their home. The loan does not have to be repaid until the homeowner sells the house, moves out permanently, or passes away.

Q3: Are there specific credit score requirements for reverse mortgages?  

A. To get certain reverse mortgage products, you will need to have a minimum credit score of 600.  If your credit score is below 600, you will still qualify for a reverse mortgage but your loan amount will be less.

Q4: How can RetireBetter help me with obtaining a reverse mortgage?  

A. RetireBetter can guide you through the complex process of obtaining a reverse mortgage. From understanding the credit score requirements to busting common myths, we provide you with all the information you need to make an informed decision.