The Bank of Canada may have held interest rates steady in July, but many Canadians are still feeling the weight of high borrowing costs. One trend we’re seeing more often is people carrying credit card balances for longer periods of time.

If that sounds familiar, you’re not alone. But it’s important to know that those balances could be quietly working against you, especially when it comes time to apply for your next mortgage.

The Credit Mistake Many Don’t Realize They’re Making

You might think that paying your credit card on time means your credit is in good shape. While that certainly helps, it’s not the full picture.

Lenders look closely at something called credit utilization. This is how much of your available credit you’re using. If your balance is more than 50% of your limit, your credit score can drop, even if you’ve never missed a payment.

This happens because credit bureaus take a snapshot of your balance at a specific moment. If they catch it while it’s high, it can appear as though you’re overextended, even if you paid it off the next day.

Minimum Payments, Maximum Consequences

Making just the minimum payment might keep your account in good standing, but it won’t reduce your balance very quickly. With some credit cards charging over 20% interest, those balances can grow fast and your score may not recover as easily.

Credit expert Richard Moxley puts it simply:

“If the balance is caught at over 50% of the limit, it will dramatically lower your score.”

Even one maxed-out credit card can reduce your score by 30 points or more. That kind of drop can make a big difference in the rates you’re offered or whether your mortgage is approved at all.

Your Mortgage Could Help You Take Back Control

If you own a home and have some equity built up, you may have more options than you think.

Refinancing your mortgage to consolidate high-interest credit card debt can:

• Lower your monthly payments
• Free up your cash flow
• Improve your credit score in just a few months

This strategy isn’t right for everyone. In the right situation, though, it can be a powerful way to regain financial stability and strengthen your borrowing power.

Let’s Talk Strategy

At First Avenue Financial, we’re here to help you see the full picture. Whether you’re preparing to buy, thinking about refinancing, or simply want to make sure your credit isn’t holding you back, we’re ready to help.

Book a call today. Let’s walk through your options and find a strategy that fits your goals.