4 min read

Paying Mortgage Help Improve Credit

Written By

Brandi Marcene
  • Your payment history is an important contributor to your credit score.

  • There are companies that help renters report rent payments to credit bureaus.

  • Making timely payments on your mortgage or rental can contribute positively to your credit score.

  • Reporting your mortgage payments to the credit bureaus can help build your credit score in a number of ways.

  • KOHO provides a variety of products and services to help improving credit in Canada.


One of the most essential factors in your credit score is your payment history. Making timely payments on your bills and debts shows lenders that you are a reliable borrower. This can improve your eligibility for loans and credit cards with higher limits and better interest rates. But this doesn't just apply to credit card bills and car loan payments, but your mortgage as well.

How Mortgage Loan Payments are Reported to Credit Bureaus

Understanding how your mortgage loan payments are reported to credit bureaus is crucial for managing your financial reputation. When you secure a mortgage, your lender regularly reports your monthly payments to these credit reporting agencies. This reporting entails sharing various key details, such as the exact payment amount, the due date, and whether the payment was made on time or if any delays occurred.

The specifics of this reporting process are important for several reasons. Firstly, credit bureaus, which are specialized entities compiling and maintaining credit-related information, utilize the data provided by your lender to calculate your credit score. This credit score is a three-digit numerical representation of your creditworthiness and financial reliability. Generally, credit scores range from 300 to 900, with higher numbers indicating a stronger credit profile.

Relationship between your Mortgage Payments and Credit Score

The relationship between your mortgage payments and your credit score is vital in the world of personal finance. The consistency and timeliness of your mortgage payments play a substantial role in determining your credit score. Regularly making on-time payments on your mortgage can contribute positively to your credit score, indicating to potential creditors and lenders that you are a responsible borrower.

Conversely, any history of late mortgage payments can negatively impact your credit score, making you appear less creditworthy and potentially resulting in greater interest rates when applying for loans or credit cards. This, in turn, could cost you more over the long term.

Maintaining Consistent Record

It's now necessary to note that the information shared with credit bureaus extends beyond just mortgage payments. Your entire credit history, including credit card payments, loans, and other financial commitments, is compiled and considered in the calculation of your credit score. Therefore, maintaining a consistent record of timely mortgage payments is just one facet of overall credit health.

How Does Mortgage Reporting Help You Build Credit?

Reporting your mortgage payments to the credit bureaus can help you build your credit score in a number of ways. Firstly, it can help you create a good payment history. This is one of the most essential factors in your credit score.

Second, reporting or using your mortgage payments can help you increase your credit limit. Your credit limit is the highest amount of credit that you are allowed to borrow.

Your credit usage ratio is lower when you have a greater credit limit. Credit utilization ratio is the amount of credit that you are using compared to your total available credit. A lower credit usage ratio can help improve your credit score.

Third, reporting your mortgage payments can help you diversify your credit mix. Credit mix refers to the various kinds of credit that you have. Having a diversified credit mix can help improve your credit score.

What Are The Drawbacks Of Payment Reporting?

When it comes to the practice of reporting your mortgage payments to credit bureaus, it's essential to be aware of several potential drawbacks. One of the most significant drawbacks is that it can complicate your ability to qualify for a mortgage in the future.

This arises from the fact that lenders gain access to a comprehensive history of your mortgage payments, and if this history reveals a pattern of late payments or financial struggles, it might deter lenders from approving your mortgage application.

Risk of Identify Theft

Another drawback that is worth considering is the elevated risk of identity theft. By sharing your mortgage payment data with credit bureaus, you provide personal information to their extensive databases. Unfortunately, this exposure can lead to numerous consequences if these credit bureau databases become vulnerable to hacking attempts. Identity thieves could potentially access and exploit your sensitive information, putting your financial well-being and personal security in jeopardy.

Additionally, the reporting process itself can be time-consuming and might entail some administrative burden on your part. You may need to ensure that your mortgage payments are consistently and accurately reported, which can be an additional responsibility to manage alongside your regular financial obligations.

It's also worth noting that the act of reporting can affect your credit score, potentially leading to fluctuations in your creditworthiness. This doesn't just impact your ability to secure future loans, but also the interest rates you're offered on those loans, potentially costing you more over time.

How Else Can You Build Your Score?

There are a number of other things that you can do to build your credit score. Here are a few tips:

  • Make all of your bill and debt payments on time. This is the most essential thing you can do to build your credit score.

  • Keep your credit utilization ratio low. Aim to keep your credit usage ratio below 30%.

  • Diversify your credit mix. Have a mix of different types of credit, such as credit cards, installment loans, and mortgages.

  • Keep your credit accounts open for as long as possible. The longer you have your credit accounts open, the longer your credit history will be.

KOHO Makes Credit Building Easier

KOHO is a financial technology company that provides a variety of products and services to help improve credit in Canada. One of KOHO's products is the KOHO Credit Building Card. This card is designed to help people with little or no credit history build their credit. The KOHO Credit Building Card is a prepaid credit card that can help you avoid overspending and acquiring more debt.

KOHO reports your credit card payments to the credit bureaus. So, every time you make a payment on your KOHO Credit Building Card, your credit score improves.

If you are interested in learning more about how to build your credit, be sure to check out KOHO's credit building guides. You can also sign up for a new KOHO Credit Building Card today.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!