If your mortgage term is ending and your credit score isn’t as strong as you’d like, you may worry about whether you’ll be able to renew or refinance. The good news is that a low score doesn’t automatically bar you from getting a new mortgage—but it can limit your options and cost you more in interest. Here’s how to approach renewal and refinancing when your credit needs work.

What counts as a bad credit score?

Credit scores in Canada range from 300 to 900. On the mortgage‑renewal scale, a “bad” credit score is usually anything below 600. Scores in the “fair” range (560‑659) may still allow you to renew, but anything under 600 raises red flags for lenders. A low score typically signals missed payments, high debt levels or limited credit history.

How does poor credit affect your renewal?

Lenders see borrowers with low scores as higher risk, which can lead to several outcomes:

• Higher interest rates. To offset risk, lenders may offer higher rates, leading to larger monthly payments.

• Fewer choices. A weak credit profile may limit the types of mortgages or lenders available.

• Shorter terms. Some lenders will renew you for only one or two years to see if your situation improves.

• Denial of renewal. In extreme cases, lenders may refuse to renew your mortgage.

Strategies to renew your mortgage with bad credit

1. Talk to your current lender

Start by speaking with your existing lender. They know your payment history and may be willing to renew even with a lower score. If you’ve made timely payments and built a good relationship, they might offer a renewal and possibly recommend hardship programs or options like adding a co‑signer.

2. Shop around for other lenders

If your current lender won’t budge, shop around. Some lenders specialize in high‑risk borrowers and may offer better interest rates, flexible repayment terms, or incentives such as cash‑back offers. Comparing quotes can uncover options you didn’t know existed.

3. Consider a co‑signer

A co‑signer with stronger credit can boost your application. This person (usually a family member) guarantees the loan and promises to make payments if you can’t. Having a co‑signer can help you get lower rates and better terms. Remember: missing payments still hurts both your credit and your co‑signer’s.

4. Work with a mortgage broker

Mortgage brokers have relationships with a wide range of lenders, including those who work with clients who have less‑than‑ideal credit. They can do the legwork of comparing options and negotiating on your behalf. Brokers are especially helpful if you’re unsure which lenders will consider your application.

5. Explore alternative options

• Refinancing your mortgage. Refinancing can replace your current mortgage with a new one, potentially lowering your monthly payment or changing the loan term. However, refinancing with bad credit is challenging, and lenders may charge higher rates or impose stricter conditions. If you have equity in your home, refinancing may be easier. You could also consolidate higher‑interest debt through a refinance, but this increases the total size of your mortgage.

• Private lenders. If traditional banks decline you, private lenders are more flexible with credit scores, focusing more on your property’s value. Be cautious—private mortgages often have higher interest rates and shorter terms.

• Downsizing or boosting your down payment. Selling your home and buying a smaller property can reduce your debt, making mortgage renewal easier. Alternatively, if you’re considering refinancing or buying a new property, saving for a larger down payment lowers your loan‑to‑value ratio and can lead to better terms.

Tips to improve your credit before renewal

Strengthening your credit score is the best way to secure better mortgage terms:

• Pay bills on time. Set up automatic payments or reminders to avoid missed or late payments.

• Reduce credit card balances. Keep balances below 30% of your available credit to improve your score and your debt‑to‑income ratio.

• Diversify your credit. A mix of credit types (credit cards, installment loans, and lines of credit) can help, but avoid opening new accounts right before renewal.

• Check your credit report. Review your report for errors and dispute inaccuracies.

Talk to a mortgage professional

Even with credit challenges, you have options. A mortgage professional can access multiple lenders and products, including specialized programs for self‑employed borrowers, rental‑purchase plans, and interest‑only loans. As part of networks like Dominion Lending Centres, mortgage professionals send millions of dollars of business to banks and credit unions, giving clients access to hundreds of mortgage products. They can help you identify strategies to renew, refinance, or repair your credit, and there is usually no cost to work with them because lenders pay their fees.

Ready to explore your renewal options? Reach out for a personalized review of your situation. With the right guidance, you can secure a mortgage that works for you—even if your credit score isn’t perfect.