The four things an underwriter reads in your file
An underwriter reads your file looking for one thing: evidence that the money will be repaid on the agreed schedule. Every pay stub, bank statement and bureau report you provide is weighed against that single question, and the evidence sorts into four buckets — capacity, credit history, collateral, and consistency — plus the practical check that you are who you say you are. Once you know what sits in each bucket, how to get a credit line stops being a mystery and becomes a list of things you can prepare for.
| What the underwriter checks | What they read in the file | What changes the answer |
|---|---|---|
| Capacity | Documented income, existing debt payments, housing costs, the proposed new payment | Stable and traceable income, fewer existing obligations, a smaller requested payment |
| Credit history | Payment record, age of accounts, balances relative to limits, recent inquiries, registered items | Time, consistent on-time payments, lower balances, fewer new applications |
| Collateral and savings | Whether the loan is secured, what asset stands behind it, liquid savings | A secured product, an asset with clear value, a cash cushion |
| Consistency | Whether employment, address, income and purpose line up across every document | Documents that agree, a clear purpose, tenure in the job and at the address |
| Verification | Identity, residency, banking and tax records | Complete, legible, current documentation |
Capacity: income minus existing obligations
Capacity is the arithmetic of your cash flow. The lender compares the income it can document against the payments you already owe, then adds the payment on the new loan or credit line. What counts is not your gross salary on its own but your documented, stable and surplus income — what is genuinely left over after housing, existing debt payments and the new obligation.
Mortgage underwriting makes that arithmetic visible. Federally regulated mortgage lenders generally work to a total debt service ratio ceiling of about 44%, and they qualify an uninsured mortgage at the greater of the contract rate plus 2 percentage points and 5.25%, under OSFI Guideline B-20. In plain terms, the lender tests whether the payment still fits when rates are higher than they are today. The same instinct runs through unsecured lending: a lender asking a self-employed applicant for two years of tax documents is running the same stress test in a different form.
Credit history: what the bureau actually reports
Canada has two national credit reporting bureaus: Equifax Canada and TransUnion Canada. A lender may pull one or both. The file holds far more than a number — how long each account has been open, the limit on each account, whether payments arrive on time, how much of each limit is in use, and whether anyone has been searching your file lately. A long, quiet, well-paid file reads very differently from a short one carrying high balances, even when both produce a similar score.
Two items stay visible for a long time. A consumer proposal remains on a credit report for 3 years after completion, or 6 years from filing, whichever comes first. A first bankruptcy remains for 6 years after discharge. If you want to see what a lender sees, the Financial Consumer Agency of Canada's guide to credit reports and scores explains how to request your report from the bureaus, what appears on it, and how to dispute information you believe is wrong.
Collateral and savings: what stands behind the loan
Secured lending changes the question from "will this person pay" to "what happens if they don't". Because a secured lender has a claim on an asset, it can often look at a wider range of files and price the risk differently. Secured lending is also capped. At federally regulated lenders, a home equity line of credit is generally limited to 65% of appraised property value, with total secured lending against the same property usually capped at 80%. Savings matter for the same reason: liquid cash gives a lender confidence that a temporary interruption will not turn into a default.
Consistency: the check applicants underestimate
Underwriters are pattern readers. If your application names one employer, your pay stub shows another, and your bank statements show deposits from a third, the file looks unstable even when nothing improper has happened. Job tenure, time at your current address, a clear and credible purpose for the money, and a story that stays the same across every document all count. So does recent behaviour: several new credit applications in a short window suggests that someone else is already lending to you, or that you are still shopping.
How to get a personal loan or personal line of credit
Preparation is most of the outcome. The steps below apply to a personal loan or personal line of credit at any lender, and they apply just as much if you are working out how to get a line of credit secured against a home.
- Know which product you need. A personal loan advances a set amount that you repay on a schedule; a personal line of credit gives you a limit you can draw on, repay, and draw on again. Revolving credit is flexible, but carrying a balance can cost more and be less predictable than a fixed instalment loan.
- Pull your own credit reports. Request them from both national bureaus before you apply, read them carefully, and correct anything that is wrong. You cannot fix what you have not read.
- Document your income. Gather pay stubs, bank statements showing deposits, and recent tax documents for self-employed or variable income. A lender can only count what it can verify.
- Reduce the obligations it can see. Paying down revolving balances lowers the debt the lender has to add to the new payment, which improves the arithmetic.
- Decide between secured and unsecured. A secured product may widen your options, but it puts an asset at risk. Understand exactly what you would be pledging.
- Compare the whole cost, not the headline rate. The Financial Consumer Agency of Canada's overview of personal loans walks through the questions to ask, including fees, the total cost of borrowing, prepayment terms and what happens if you miss a payment.
- Apply deliberately. A cluster of applications in a short period makes a file look stressed rather than decisive.
Why two people with the same income get different answers
Income is one input, not the answer. Two applicants earning the same salary can land in different places because of everything that sits around that salary.
- Stability of the income. A salary confirmed by two years of payroll deposits is easier to count than commission, contract or self-employed income that varies month to month, even when the annual total is identical.
- Existing obligations. A car payment, a student loan and a revolving balance all change the arithmetic even when income does not.
- Use of available credit. Carrying a balance near the limit on several accounts reads differently from using a small share of the same limits.
- Depth of file. A thin file with two accounts gives an underwriter less evidence than a decade of on-time payments, even when both scores look similar.
- Registered items. A consumer proposal, a bankruptcy or a judgment changes the answer for a defined period.
- The product applied for. A secured line of credit and an unsecured loan are not the same risk, so they are not assessed the same way.
- Who is lending. Lending in Canada is licensed provincially, so the regulator and the rules differ depending on who you are dealing with. Federally regulated financial institutions' consumer complaints go to the Financial Consumer Agency of Canada, while provinces license and supervise most other lenders.
The lowest rates are only available to the most qualified applicants. That is not a marketing line; it is a description of how risk pricing works. Every lender prices the possibility of not being repaid, and the files that look least risky receive the most favourable terms.
What the rules set, and what they leave to the lender
Canada sets outer limits on the cost of credit but does not set your rate. The Criminal Code criminal rate of interest is 35% per year, and charging above that threshold is a criminal offence. Payday lending sits in its own framework: where a province operates a licensed payday lending regime, the federal Payday Lending Regulations cap the cost of borrowing at $14 per $100 advanced, and where a province sets a lower cap, the lower cap applies. Some provinces set a lower cap, and Quebec does not license payday lending at all, which effectively prohibits the model there. A payday loan is generally up to $1,500 for a term of 62 days or less.
Benchmarks are not offers. The Bank of Canada publishes the policy interest rate, the prime rate, conventional mortgage rates and Government of Canada benchmark bond yields. Those figures tell you what money costs in the system; no lender is obliged to lend to you at them, and a benchmark quoted in the news is not a quote for your file. Canadian fixed-rate mortgages are compounded semi-annually by law, which is one reason a rate described one way can appear as a different number elsewhere.
If your situation involves a consumer proposal or a bankruptcy, only a licensed insolvency trustee can administer it. That is a regulated role, and it is separate from anything a lender or a matching service does.
Where loanmoose.ca fits
loanmoose.ca is not a lender. It does not make loans, set rates, or make credit decisions. It is a matching and comparison service: it helps you find lenders whose products may fit your situation, and the lender then runs its own underwriting and decides. Nothing on this page is financial, legal or tax advice, and the right answer for your file depends on your circumstances. For a significant decision — especially one involving a home or a registered item on your credit report — speak with a regulated professional.