In Canada, your credit score is built mainly on five factors: your payment history, your credit utilization rate, the age of your accounts, the variety of credit types you manage and new credit applications. Payment history and utilization generally matter the most — and they are also the ones you have the most control over.
Payment history: the factor that carries the most weight
Paying on time, every time, is what counts most. Equifax and TransUnion, Canada’s two credit bureaus, record every payment your creditors report: credit cards, loans, credit lines, sometimes even your cell phone. A payment that is 30 days late or more can drag your credit score down sharply and stay on your report for several years — typically six, with some variation by province and by bureau.
What you control: automate at least the minimum payment on every account, and if a late payment happens, bring the account current quickly. The older an incident gets, the less it weighs. On-time payments, meanwhile, rebuild your file month after month.
Credit utilization: the fastest lever
The second major factor is how much of your available credit you are using. Someone whose cards are nearly maxed out looks riskier than someone who keeps room to spare, even on the same income. The commonly cited rule of thumb: aim for under 30% utilization, on each account and overall. For example, with a $6,000 limit, that means keeping the balance below $1,800 — and ideally much lower.
It is also the factor that moves the fastest: card issuers report your balances every month, so paying down a large balance can show up as soon as the next cycle. Paying before your statement date (not just before the due date) helps, because it is often the statement balance that gets sent to the bureaus.
The length of your credit history
A long, stable history is reassuring: it shows how you handle credit over time. Scoring models look at the age of your oldest account and the average age of all of them. That is why closing an old no-fee card is rarely a good idea, and why newcomers and young borrowers often start with a fragile score without having done anything wrong.
This factor is built over time: keep your oldest accounts open and active with light occasional use, paid in full.
The mix of credit types you manage
The bureaus also look at the mix of your accounts: revolving credit (cards, a line of credit) and installment credit (car loans, personal loans). Managing more than one type of credit responsibly sends a positive signal, because it shows you can handle different kinds of obligations.
It is a secondary factor, though: never open a new loan just “for the mix”. The cost and risk of unnecessary borrowing far outweigh any possible gain on this criterion.
New credit applications
Every time a lender pulls your report for a credit application, a hard inquiry is recorded. One isolated inquiry has a small, temporary effect, but several inquiries close together send a risk signal — as if you were urgently hunting for credit. Checking your own report, on the other hand, is a soft inquiry with no impact at all.
What you control: group your rate shopping into a short window, favour soft-inquiry prequalifications when they are offered, and be wary of quick fixes like a payday loan: most of these lenders do not report your good payments to the bureaus, so they do nothing for your file — but a default can end up on it.
What does not go into the calculation
Your income, your bank balance, your age, your marital status and your postal code are not part of your score. Lenders may weigh them separately in their decision, but the score itself only reflects the credit behaviour reported to the bureaus. Note as well that Equifax and TransUnion do not hold exactly the same data or use the same models: having two different scores is normal.
Next steps
Start with the concrete moves: automate your payments, bring your card balances under 30% of your limits and request your report from both bureaus to catch errors. Once those basics are in place, your score works for you. And before you borrow, take the time to compare several lenders: for the same profile, offered rates vary from one lender to the next, and any advertised numbers remain illustrative until you have a firm offer.
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Frequently asked questions
What is the most important factor for my credit score?+
Payment history. Paying every account on time, every month, is the single biggest driver of your score at both Equifax and TransUnion. One payment that is 30 days late or more can lower it noticeably and stay visible for years.
Does checking my own credit score lower it?+
No. Looking at your own report is a soft inquiry, with no effect on your score at all. Only hard inquiries, made by a lender when you apply for credit, can lower it slightly.
Can closing an old credit card hurt my score?+
Yes, often. Closing an old account can shorten the average age of your history and reduce your available credit, which pushes your utilization rate up. If the card has no annual fee, keeping it open with light occasional use is usually better.
Does my income affect my credit score?+
No, your income does not appear in your credit report and is not part of the score calculation. Lenders do consider it separately when reviewing your application, mainly to assess your ability to repay.