There are plenty of reasons why you want to know what your credit score is. Perhaps you’re taking out a loan or credit card, or applying for a mortgage. Or, maybe you’re applying for a job or are looking to take out an insurance policy. Whatever the case, your Canadian credit scores can play a key role in how successful you are at obtaining any of these.
So, how do you find out what your credit score is, and what factors impact your credit?
Key Points
- You can check your credit score with the major credit bureaus in Canada, some major banks and third-party credit score providers.
- Canadian credit scores range from 300 to 900.
- Good credit is important to qualify for loans and credit products at lower rates.
- Improving your credit score requires timely bill payments, minimizing credit card expenditures, and avoiding too many loan applications.
What Is A Credit Score?
A credit score is a numerical value assigned to all borrowers, representing a person’s likehood to repay a loan. This score is calculated using the data in your credit report. Lenders use it to evaluate your creditworthiness when making credit decisions and accepting new borrowers. So, if you’re interested in acquiring a loan, or line of credit, having a good credit score can be important.
Canadian Credit Score Ranges
Canadian credit scores range from 300, the worst, to 900, the absolute best. The higher your credit score, the higher your probability of being accepted for a loan or mortgage. Similarly, people with higher credit scores are typically offered lower interest rates and pay less interest overall.
On the other hand, people with a credit score below 660 may have some difficulty obtaining new credit. Thus, your goal should be a credit score of 660 or more.
What Is Good Credit?
Whether you have ‘good’ or ‘bad’ credit depends on where your credit score falls along the spectrum:
| Credit Score Rating | Credit Score Range |
| Excellent | 760+ |
| Very Good | 725–759 |
| Good | 660–724 |
| Fair | 560–659 |
| Poor | 300–559 |
Where Can I Find My Canadian Credit Score?
Everybody is entitled to his or her credit report and score, which can be accessed from the two credit bureaus in Canada: Equifax Canada and TransUnion Canada.
There are also online resources you can use that provide you with access to your credit score for free, such as the following:
| Cost | Credit Score | Credit Report | ||
 | Free | Yes | Yes | Visit Site |
 | Free | Yes | Yes | Visit Site |
 | Free | Yes | Yes | - |
It’s recommended that you check your credit report regularly to ensure correct information and no errors. This also gives you a chance to see where you stand in terms of credit health. It also allows you to spot any suspicious activity that could be signs of identity theft.
| Will Checking Your Credit Hurt Your Credit? Checking your own credit does not hurt your credit score, no matter how many times you check it. When you check your credit, it is considered a “soft” credit check. |
How Is Your Canadian Credit Score Calculated?
There are many different scoring models used to calculate your credit scores. Most scoring models use five pieces of financial information to calculate your credit score. Each of these factors plays a significant role and holds a specific “weight”. Some factors are more important and have a stronger influence on your score than others:
Payment History (~35%)
Your payment history usually holds the most weight when calculating your credit score. More specifically, your payment history contributes roughly 35% of your credit score.
Thus, if you have a positive history, your credit score will likely be high, while a negative payment can damage your credit score. Knowing this, be sure to pay all your bills on time and in full so that your payment history remains positive and your score remains high.
Credit Utilization (~30%)
Sometimes referred to as a debt-to-credit ratio, your credit utilization ratio refers to how high your credit balance is relative to your total available credit limit. It’s recommended that you keep your credit utilization ratio under 30% to ensure a healthy credit score.
Length Of Credit History (~15%)
The age of your credit accounts and the length of your credit history play a role in your credit health. An individual who is established and has used credit cards over a long period is often seen as less risky than someone just receiving their first credit card. So, the longer you’ve had credit accounts on file and the older the average age of these accounts, the better for your credit score, generally speaking.
New Credit (~10%)
Every time you apply for a new loan or credit product, the lender may perform a ‘hard credit check’. When this happens, your credit score may drop a few points for several months. This is why you mustn’t apply for too many new credit accounts or loans within a short time, as your credit score could decrease even more significantly.
Public Records (~10%)
Public records include bankruptcies, consumer proposals, collection issues, liens, and lawsuits. These negative remarks will remain on your credit report for years and are visible to lenders and creditors who perform hard credit checks. Having these public records on your credit file could negatively affect your credit score.
How To Improve Your Credit Score
To improve your credit score, follow these suggestions:
Pay Your Bills On Time
Your payment history is perhaps the most important factor affecting your credit score. This is why it’s so important that you make timely payments every month. Consider setting up payment reminders or automatic payments with your credit provider if you struggle to pay bills on time.
Pay Your Credit Card Bill In Full By The Due Date
Paying the minimum amount on your monthly credit card statement may be enough to avoid late payments. However, if you’re looking to fix your credit score, covering the full balance amount every billing cycle is best.
Don’t Max Out Your Credit Card
Stop using your credit card so often and if you can’t, at least use it responsibly. This means you should never spend the entire credit limit on your card. Instead, keep the balance well below the limit. A lower credit card balance is better for your credit.
Keep Old Credit Accounts Open
A long history of responsible credit usage is important if you want good credit. Plus, old accounts can increase the average age of your credit accounts. While cancelling a credit card may be a way to prevent yourself from racking up debt you can’t afford, you may want to keep an old account open.
Reduce The Number Of Credit Applications You Make
Every time a lender checks your credit report — known as a ‘hard inquiry’ — your credit score can suffer. Too many hard inquiries in a short window can have an even more pronounced effect on your score.
Create A Budget
Having a detailed budget that includes all your expenses and earnings can help you see how much money you have left over each month after all your financial obligations have been met.
Check Your Credit Report For Errors
Mistakes on your credit report can drag down your credit score without realizing it. If you spot any errors, report them to the credit bureau and have them fixed right away.
Keep in mind that repairing bad credit is not an overnight success. It takes time and patience, and there is no quick or easy way. By following these suggestions and using your credit card very cautiously, you can steadily rebuild your credit.
Why Is It Important To Have A Good Credit Score?
The whole point of having credit is to prove to creditors that you’re reliable enough to handle a loan or line of credit. A good credit score shows lenders that you’re creditworthy and have a good history of making proper payments. On the other hand, a poor score might tell creditors and lenders that you’re likely unable to manage your debt.
Ultimately, a good credit score will be one of the deciding factors in the following scenarios:
- Getting approved for new credit
- Securing lower interest rates
- Getting a job
- Getting a lease
- Securing lower insurance policy premiums
Your credit score plays a role in several areas of your life, so ensuring it is as strong as possible is important.
How To Protect Your Credit Score
If you’re worried about the health of your credit, consider a credit monitoring service to protect yourself from fraudulent accounts and charges. This service acts as somewhat of a personal security guard. With a credit monitoring service, you can:
- Track your credit score. Some credit monitoring services provide access to your credit report and credit score.
- Spot errors. You can monitor your credit report for mistakes and suspicious activity, which can pull down your credit score. If you notice any, you should report them to the credit bureau and have them fixed immediately.
- Receive alerts to account changes. You’ll also be notified when changes are made to your credit file, such as new accounts opened in your name. This is a great way to spot potential efforts to steal your identity.
Credit monitoring keeps you on track to maintaining a high, healthy credit score.
Final Thoughts
Given the importance of your credit score to your financial life, it makes sense to do what you can to ensure it’s as healthy as possible. Adopt healthy spending habits and check your credit score regularly to keep tabs on where you stand and whether improvements need to be made.
