If you’re looking to buy your first house, have dealt with debt in the past, or are simply trying to take control of your overall financial health, understanding your credit scores can be helpful. But what is good credit, exactly? What credit score should you be aiming for?
In this article, we’ll talk about everything you need to know about your credit scores, including what good credit looks like and how to achieve a positive credit profile.
Key Points:
- A ‘good’ credit score in Canada is anything between 660 and 724.
- To achieve good credit, you’ll need to pay your bills on time, keep your credit card expenditures low, and avoid applying for too many loans at once.
- With good credit, you’ll have a better chance of getting approved for loans, and can secure lower rates and better loan terms.
What Is Considered A Good Credit Score?
Credit scores range from 300 to 900 in Canada. Different credit score ranges are given specific credit ratings, as follows:
| Credit Score Rating | Credit Score Range |
| Excellent | 760+ |
| Very Good | 725 – 759 |
| Good | 660 – 724 |
| Fair | 560 – 659 |
| Poor | 300 – 559 |
As you can see, a “good” credit score is 660 or above, and an “excellent” score is 760 or above.
Why Is A Good Credit Score Important?
Ideally, you should aim to have a credit score that’s at least in the “good” category to increase your chances of loan approval at competitive rates and favourable loan terms. Higher credit limits and more competitive reward programs may also be awarded to consumers with “good” credit scores.
Ultimately, the higher your credit score, the more financial flexibility you will have at your fingertips.
Keep in mind that good credit is helpful, but not the only factor that lenders and creditors take into consideration when assessing an application.
Who Decides If You Have Good Credit?
Now that you know what good credit is and why it can be helpful in certain financial situations, who decides if you have good credit?
Your credit score is determined by the credit bureaus (Equifax and TransUnion) and lenders, who assess your financial behavior based on a range of factors. Your score is also determined by the credit scoring model used.
Credit Bureaus
Equifax and TransUnion collect your financial information, such as payment history, credit history length, and credit utilization, and use this information to calculate your credit score.
Each bureau uses a different scoring model, so your score may differ slightly between the two.
Lenders
Banks, credit card providers, and other lenders use your credit score to determine your creditworthiness. Each lender has their own unique criteria. For instance, a credit score of 660 may be a good indicator of a borrower’s creditworthiness to one lender, while another lender may only require a credit score of 640.
Credit Scoring Models
As mentioned, specific credit scoring models are used to calculate your credit score. These models depend on specific information to calculate your score, such as the following:
- Payment history
- Credit utilization
- Credit history length
- Types of credit
- Credit inquiries
How To Check If You Have Good Credit?
If you want to check our credit, you have a variety of options to choose from.
Check Your Credit Score With The Credit Bureaus
You can check your credit score with either Equifax or TransUnion. Equifax, one of Canada’s credit reporting bureaus, offers all consumers free access to their credit score and credit report. TransUnion offers consumers in Quebec free access to their credit score, though all other Canadians must pay a monthly subscription fee to access their credit scores.
Check Your Credit Score With Your Bank
Canada’s Big Five Banks allow clients to see their credit scores for free. You’ll need to be a client to see your score.
RBC, CIBC, Scotiabank, and BMO are partnered with TransUnion to offer clients access to their CreditView Dashboard, which allows consumers to check their TransUnion credit scores through online and/or mobile banking.
TD Bank allows its clients to check their Equifax credit score through Interac verification service, a third-party app.
Check Your Credit Score With A Third-Party Credit Score Provider
You can also choose to check your credit score via an online third-party provider, including the following:
| Cost | Credit Score | Credit Report | ||
 | Free | Yes | Yes | Visit Site |
 | Free | Yes | Yes | Visit Site |
 | Free | Yes | Yes | - |
Note: Keep in mind that all these credit score providers may use different scoring models. This means that your score will likely be different, depending on the provider you choose.
Can Good Credit Affect My Daily Life?
In addition to lenders and creditors, other companies and individuals may use your credit score, including potential landlords, banks, lenders, and insurance companies, to evaluate your creditworthiness. This means that your credit scores play a role in your ability to get approved for a loan, new credit, and even a new apartment or a job.
Can Good Credit Affect Your Ability To Qualify For A Loan?
As mentioned, your credit score plays a role in your ability to get a loan. Lenders prefer to work with borrowers with good credit, as this will reduce the odds of loan default.
Your credit score may also affect the terms of your loan and the interest rate. So, the higher the score, the better.
Can Good Credit Affect Your Credit Card Approval?
Most credit card companies have minimum credit score requirements. Generally, more premium credit cards will have higher eligibility requirements, such as a good to excellent credit score. These credit cards often have better rewards and perks than other credit cards.
If you don’t have good credit, you may want to look at other types of credit cards, such as secured cards, which may have lower credit score requirements.
Can Good Credit Affect Your Ability To Get A Job?
Some employers look at applicants’ credit scores when assessing who to hire and who to politely decline. They typically want to see applicants with a high credit score before hiring someone, especially when it comes to positions in the financial sector. They might see bad credit scores as a sign of irresponsibility and therefore might choose to hire someone else.
While there are certainly many factors that go into the decision of who to hire for a certain position, having good credit can be just enough to put you on top. However, do remember that a potential employer is required to get permission from you before authorizing a credit check.
Can Good Credit Affect Your Insurance Premiums?
Not only will good credit afford you lower interest rates on loans, but it may also allow you to take advantage of lower insurance premiums. Insurance comes in many forms including house insurance, auto insurance, life insurance, and health insurance. Premiums can cost quite a bit, but if your credit score is healthy, you may be able to snag lower rates, saving you money over the long haul.
Insurance providers usually check your credit score before they approve your application and provide you with a premium rate.
Can Good Credit Increase Your Chances Of A Lease Approval?
Like lenders, landlords want to make sure you’ll be able to make your rent payments every month, and a good credit score will provide them with more assurance that you will.
As such, a potential landlord may want to check your credit history. A bad credit score may show them that you can’t be trusted to pay your rent on time, and therefore they might rent to someone who is less of a risk.
How To Maintain A Good Credit Score?
There are plenty of perks associated with having a good credit score. But credit scores fluctuate with time and information that is reported to the credit bureaus. Depending on the type of information reported, it can positively or negatively impact your credit scores.
That’s why it’s important to be diligent with your credit habits so that you can maintain your good credit scores. Here are some ways to help you maintain “good” credit.
Pay Your Bills On Time
The most important thing you can do to achieve and maintain good credit is to pay your bills on time. This includes loan payments, credit card payments, utility bills, and even cell phone bills.
Your payment history generally accounts for 35% of your credit scores. So, missed or late payments can negatively affect your credit, but keeping up with bill payments can give your credit score a major boost.
Keep Your Credit Utilization Low
The amount of debt you have in comparison to your credit limit is another factor that can influence your credit scores. Balances that are close to your credit limit can impact your credit scores. In general, lenders like to see a low credit utilization ratio (around 30%).
For instance, if you have a credit card limit of $10,000, keeping your credit card expenditures to less than $3,000 per month (which is 30% of your credit limit), is recommended.
Don’t Open Too Many Credit Accounts In A Short Period Of Time
When you apply for a credit product, the lender will pull your credit report, which is known as a hard inquiry. Too many hard credit checks can negatively affect your credit and could indicate financial distress to future lenders, which may result in your loan or credit application being rejected.
Keep Old Accounts Open
Your credit history is another factor that is commonly included in the calculation of your credit scores. Try to keep old credit card accounts open, especially if they don’t have an annual fee. Simply keeping these accounts open and active can help establish your credit history, which can help build and maintain your good credit.
Bottom Line
Whether you’re trying to get a loan, a credit card, or are applying for an apartment, good credit may play an important role. Not only that, but good credit scores can lead to faster loan approvals and better loan terms, including lower interest rates and flexible payment options. Working to build a healthy credit history can be an important part of creating a balanced financial life.
