Understanding Your Canadian Credit Score
In Canada, credit scores unlock better rates and approvals for mortgages, car loans, and even some rentals. Your score is a three‑digit snapshot of risk that lenders use to estimate how likely you are to repay on time. Learning how it’s calculated and how to improve it is one of the best returns on your time.
The bureaus and the score
Canada has two major credit bureaus: Equifax and TransUnion. Lenders may report to one or both, so your scores can differ slightly. Scores generally range from 300 to 900. Anything above about 760 is usually considered excellent, but approval decisions also consider your income, debt, and overall file.
The five key factors
Payment history carries the most weight. A single late payment can linger for years, so set up autopay for at least the minimum due. Utilization is the ratio of your balances to your limits—try to keep it under 30% overall and on each card. Credit history length rewards older accounts, so avoid closing your oldest card. Credit mix includes different types of credit like credit cards, lines of credit, and installment loans. New credit reflects hard inquiries; too many in a short period can temporarily lower your score.
How to build credit from scratch
If you’re new to Canada or rebuilding, consider a secured credit card with a small limit and a deposit, or ask a trusted person to add you as an authorized user on a well‑managed card. Use the card for predictable expenses like a streaming service and pay in full each month. Over time, you may qualify for higher limits or unsecured cards.
Repairing a damaged score
Start with accuracy: get your reports from both bureaus and dispute any errors. Bring all accounts current, then prioritize high‑interest balances. If utilization is high, request a limit increase on a card with no fee and good standing, but only if you won’t be tempted to overspend. Avoid closing accounts abruptly, which can reduce your available credit and shorten your history.
Protecting your credit
Enable alerts for every credit account and consider free monitoring services. Freeze or flag your file immediately if you suspect fraud. Use strong, unique passwords and two‑factor authentication for banking and credit apps. Keep your address and contact information updated so you don’t miss statements.
When to check your score
Checking your own score is a soft inquiry and doesn’t hurt. Review quarterly to spot trends. If you plan to apply for a mortgage, start preparing six to twelve months in advance: pay down balances, avoid opening new accounts, and correct inaccuracies.
The bigger picture
Credit is only one part of financial health, but it affects many costs in Canada. A strong score widens your options and lowers borrowing costs, freeing up money for investments and goals that matter to you. With consistent on‑time payments, controlled utilization, and strategic planning, almost anyone can build an excellent score.