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Understanding Credit Scores in Canada
What it means, how it's calculated, and how to improve yours.
What is a Credit Score?
Your credit score is a 3-digit number (300–900) that tells lenders how likely you are to repay borrowed money. The higher the score, the more trustworthy you appear to banks, landlords, and credit card companies.
Credit Score Ranges
300–559Poor — Difficulty getting approved for credit
560–659Fair — May get approved with higher interest rates
660–724Good — Most applications approved
725–759Very Good — Better rates and terms
760–900Excellent — Best rates, easiest approvals
How It's Calculated
- ⬥Payment history (35%): Do you pay bills on time? This is the biggest factor.
- ⬥Credit utilization (30%): How much of your available credit are you using? Keep it under 30%.
- ⬥Credit history length (15%): Longer history = better. Don't close old accounts.
- ⬥Credit mix (10%): Having different types (credit card, car loan, etc.) helps.
- ⬥New credit inquiries (10%): Too many applications in a short time hurts your score.
How to Check Your Score (Free!)
- ⬥Borrowell: Free Equifax credit score, updated weekly
- ⬥Credit Karma: Free TransUnion credit score
- ⬥Your bank app: Many Canadian banks now show your score for free
💡 Good to know:
Checking your OWN credit score is a "soft inquiry" and does NOT hurt your score. Check it as often as you want!
7 Ways to Improve Your Score
- Pay every bill on time. Set up auto-pay for at least the minimum.
- Keep credit utilization under 30%. If your limit is $5,000, keep your balance under $1,500.
- Don't close old credit cards. The age of your accounts matters.
- Limit new credit applications. Each "hard inquiry" dings your score slightly.
- Diversify your credit. A mix of credit types shows you can handle different debts.
- Dispute errors on your report. Check your report annually for mistakes.
- Be patient. Scores improve over months, not days.
🍁 Canadian Pro Tip
Canada has TWO credit bureaus — Equifax and TransUnion. Your score may differ between them. Check both! You're entitled to one free credit report per year from each bureau by mail.