Knowing where your credit lies on the credit score range is important. Depending on your scores and ranking, you may receive lower interest rates and may be more likely to be approved for loans and other credit products. There are two different credit reporting bureaus in Canada, Equifax and Transunion. Each has its own approach to determining scores. Generally, a credit company or lender will look at both your credit score and your credit report, as well as a variety of other factors (employment status, income, debt levels etc.) to determine your creditworthiness. You are the only one who can improve your credit scores, this makes understanding your credit that much more important.
There is no definitive model for what certain credit scores mean to all lenders and creditors. One lender may consider credit scores of 760 to be excellent, while another may consider scores above 780 to be excellent. It all depends on what scoring model that specific lender uses and how they use it during their approval process. That being said, if you’re interested in knowing what your credit scores mean, here are some general guidelines that can help.
| Range | Meaning |
| Excellent (Scores 760+) | Individuals with a rate of 760 or over may enjoy the best interest rates on the market. They also will typically always be approved for a loan. |
| Very Good (Scores 759 – 725) | This is considered near perfect and individuals with a rate in this range may still enjoy some of the best rates available. |
| Good (Scores 724 – 660) | An individual who has credit scores that fall within this range has good credit and will typically have little to no trouble getting approved for the new credit. |
| Fair (Scored 659 – 560) | Scores in this range indicate that the individual is a higher risk. It may be difficult to obtain loans and if approved, they will be offered higher interest rates |
| Poor (Scores 559 – 300) | Credit scores that fall in this range may indicate that a consumer has trouble making payments on time or is in the process of building their credit history. |
Good credit scores in Canada are usually 660 or higher. Of course, there are many different types of credit scores and scoring models. This means that what one lender considers to be a “good” credit score will not be the same for another lender. Furthermore, the credit scores a lender sees are different from those that you might have access to. Additionally, your Equifax credit scores might be different from your TransUnion scores.
A 600 credit score falls under the “fair” credit score range. With a 600 credit score, you may be able to qualify for a loan with a bank, however, you won’t get the most competitive rate. Borrowers with a 600 credit score may have better luck qualifying for a loan with alternative lenders whose lending criteria are much more lax than banks.
If you have a 620 credit score, it usually means you have fair credit. While you may be considered higher risk by lenders, you can usually still qualify for loans, though it may be difficult. Moreover, you’re likely to get charged much higher rates than those with good or excellent credit.
A credit score of 750 is considered very good (scores between 725 – 759). In fact, with a credit score of 750, you’re only 10 points away from excellent as credit scores that fall between 760 and 900 are considered excellent. With a 750 credit score, you’ll be able to qualify for loans at great rates.
Credit scores above 759 are considered excellent. So with an 800 credit score, you’ll be able to access almost any credit product. Moreover, you’ll be able to qualify for the best rates and terms.
There are five main factors that can affect the calculation of credit scores. If you’re interested in improving your credit, understanding what these factors are can help you create a plan to build healthy credit habits.
How you manage your payments is one important factor used during the calculation of your credit scores. This includes how many accounts you have open as well as all the positive and negative information about these accounts. For example, if you make payments on time or late, how often you make late payments, how late the payments were, how much you owe, and whether or not any accounts are delinquent.
Sometimes referred to as a credit utilization ratio, many credit scoring models take into account how high your balance is compared to your total available credit limit. Specifically when it comes to revolving credit, for examples credit cards and lines of credit.
Your credit file includes how old your credit accounts are and will influence the calculation of your credit scores. The importance of this factor will differ depending on the scoring models, but generally speaking, how long your oldest and newest accounts have been open is important.
Public records include bankruptcies, collection issues, liens, lawsuits, etc. Having these types of public records on your credit report may have a negative effect on your credit scores.
When a creditor or lender checks your credit file (because they are in the process of extending credit to you) it is called an inquiry and is noted in your credit report. These types of credit inquiries (also called hard checks), can impact the calculation of your credit scores.
Your credit reports contain both personal information and financial information. Your credit reports illustrate who you are as a borrower, both the good and the bad. Checking it allows you to keep an eye on your accounts, make sure there are no errors, and even potentially prevent the damaging effects of fraud. A credit report is the report card of your credit life and understanding how to read it can help you take control of your credit and be prepared for any of your future credit needs.
Depending on which credit report you check, from Equifax or TransUnion, you may see any combination of the following information.
Each of your credit accounts will be given a rating that includes a letter and a number.
| Installment | (I) | Accounts that receive an “I” are installment-style accounts that are paid off in predetermined fixed amounts. For example, a car loan. |
| Open | (O) | Accounts that receive an “O” are open, meaning you have an open credit account. An example is a credit card bill that you pay at the end of the month. |
| Revolving | (R) | Accounts that receive an “R” are considered revolving credit because your payments change based on how much of your limit you borrow. A credit card may receive an “R”. |
| Mortgage | (M) | Depending on the credit bureau you pull your report from, your mortgage may or may not show up. If it does, it may be represented by an “M” or potentially an “I” for installment. |
| 0 | Account is too new to rate |
| 1 | Account has been paid off as agreed |
| 2 | Late by 31-59 days |
| 3 | Late by 60-89 days |
| 4 | Late by 90-119 days |
| 5 | Late by more than 120 days |
| 6 | This number is not assigned a value |
| 7 | Account is associated with consolidation, consumer proposal, or debt management program |
| 8 | Account associated with a repossession |
| 9 | Account is in collections or bankruptcy |
The good news is that the health of your credit is completely in your hands and you have the power to improve it simply through the way you manage your credit products. Responsible use of your credit cards and loans, over time, can improve your credit score and therefore allow you to qualify for other larger loans, for example, a mortgage, in the future.
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Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.
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