Credit score in Canada: understand it and improve it

Your credit score in Canada is a number that usually falls between 300 and 900. The higher it is, the more reliable you appear as a borrower, which unlocks better interest rates and more favourable terms. Improving it comes down to a few habits: pay on time, keep your credit use low, and monitor your report. Here is how it all works.

What a credit score is and its range

A credit score is a numeric estimate of your creditworthiness, calculated from the information in your credit report. It condenses your borrowing and repayment history into a single number.

In Canada, the scale runs from about 300 to 900. As a rough guide:

• Below 660: fair to poor, which can limit your options.
• 660 and above: generally considered good.
• 760 and above: excellent, giving you access to the best available rates.

These thresholds are general benchmarks; each lender applies its own criteria when assessing you.

The two credit bureaus: Equifax and TransUnion

In Canada, two main credit bureaus compile your report: Equifax and TransUnion. Each gathers information reported by your lenders and financial institutions, then produces its own report and its own score.

It is normal for your two scores to differ slightly: lenders do not always report data to both bureaus at the same time, and each bureau uses its own scoring model. That is why it is worth checking both reports.

What factors affect your score

Several elements of your report feed into the calculation:

• Payment history: the most important factor. On-time payments raise your score; late payments, delinquencies, and defaults drag it down.
• Credit utilization: the ratio of your balances to your credit limits. Staying under 30% of your limit is viewed favourably.
• Length of credit history: a longer, well-managed track record works in your favour.
• Credit mix: having different types of credit (card, loan, line of credit) that are well managed can help.
• Inquiries: “hard inquiries” (when a lender reviews your file for a new application) can slightly lower your score, especially when several pile up in a short period.

How to check your score for free

You have the right to see your own credit report. Equifax and TransUnion must provide you, on request, with a copy of your report, often free of charge by mail. Many financial institutions and apps also offer free access to your score.

Checking your own report is a soft inquiry: it has no effect on your score. Make it a habit to review it regularly to catch any errors or fraudulent activity.

Concrete steps to improve your score

• Always pay on time. Automate at least the minimum payment so you never miss a due date.
• Lower your balances. Aim to keep utilization under 30% of your limits, ideally less.
• Don’t close old accounts without reason: they lengthen your credit history.
• Space out credit applications and avoid stacking several in a short window.
• Correct errors. If your report contains an inaccuracy, report it to the relevant bureau to have it fixed.
• Be patient. Improvements show up over several months of consistent behaviour.

How your score affects loan rates

A high score signals lower risk to the lender, which usually translates into lower interest rates and more flexible terms. A low score can mean higher rates, reduced limits, or even a refusal. On a mortgage or car loan, even a small difference in rate can add up to thousands of dollars over the life of the loan.

That said, your score is only one of the factors considered: the lender also looks at your income, employment stability, and level of debt.

Common myths

• “Checking my score lowers it.” False: your own check is a soft inquiry with no impact.
• “Closing a card improves my score.” Not necessarily: it can reduce your available credit and shorten your history.
• “I have no debt, so I have an excellent score.” Without a credit history, it is hard for a lender to assess you.
• “All my scores are the same.” They vary between Equifax and TransUnion depending on the data each receives.

Next steps

Start by requesting a copy of your report from both Equifax and TransUnion to learn your starting point and confirm the information is accurate. Set up automatic payments, bring your balances below 30% of your limits, and track your progress over a few months. These consistent habits are the most reliable way to build and maintain a strong credit score.