What Your Credit Score Range Really Means
Knowing where your credit falls 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.
Generally, a credit company or lender will look at both your credit report and your credit score in Canada, 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.
Summary Of Article: Key Takeaways
- Credit scores range from 300 to 900.
- Good credit scores range from 660 to 900.
- Bad credit scores range from 659 to 300.
- You have multiple credit scores. All credit score providers have their own scoring models. If you check your credit with two different providers, you may see two different scores.
- You can get your credit score in Canada for free from Equifax, Transunion (QC only), Loans Canada CompareHub, Borrowell, and other third-party service providers.
- These are five common factors used to calculate your credit score in Canada: Payment history, debt-to-credit ratio, public records, credit history and credit inquiries.
What Is A Good Credit Score In Canada?
A good credit score range is usually between 660 to 900. 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.
Credit Score Ranges In Canada
As we mentioned above, 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.
- Excellent (Scores 760+)
- Very Good (Scores 725 -759)
- Good (Scores 660 – 724)
- Fair (Scored 560 – 659)
- Poor (Scores 300 – 559)
How Do I Check My Credit Score In Canada?
You can check your credit score for free through the major credit bureaus Equifax and Transunion. However, Transunion has many restrictions on how you can access your credit score and is only available for free the Quebec residents.
You can also access your credit scores through some banks and third-party service providers like Loans Canada Compare Hub, Borrowell and Credit Karma.
Why Is My Credit Score Different?
There are two different credit reporting bureaus in Canada, Equifax and Transunion. Each has its own approach to determining scores.
Of course, you can check your score for free from several third-party providers. However, they can calculate your score using their own methods. That means your credit range can shift depending on where you look.
You can use Compare Hub, which has the Equifax score and report.
Is 600 A Good Credit Score In Canada?
In general, 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 probably 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.
Is 620 A Good Credit Score In Canada?
If you have a 620 credit score, it usually means you have fair credit. While certain lenders may consider your credit score to be risky, keep in mind that credit scores are not the only deciding factor when it comes to loan and credit approval.
Is 750 A Good Credit Score In Canada?
A credit score of 750 is considered very good (scores between 725 and 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.
Is 800 A Good Credit Score In Canada?
Credit scores above 759 are considered excellent. Lenders that check credit will be happy to see that you have a high credit score, but ultimately loan approval depends on a variety of factors.
What Factors Affect The Calculation Of Your Credit Scores In Canada?
Payment history, credit history, public records, debt-to-credit ratio and credit inquiries, are five common factors used to calculate credit scores. If you’re interested in building your credit, understanding what these factors are and how they may impact your credit can help you create a plan to build healthy credit habits.
1. Payment History (~35%)
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.
2. Debt-to-Credit Ratio (~30%)
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 example, credit cards and lines of credit.
3. Length Of Credit History (~15%)
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.
4. Public Records (~10%)
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.
5. Inquires (~10%)
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.
How To Improve Your Credit Score Range In Canada?
As mentioned, there are many factors that can affect your credit scores. Working on improving those factors can help your credit score. Similarly, here are a few other things you can do to help improve your credit score range:
- Don’t Apply For Too Many Credit Products – When searching for a loan or credit card, it’s important to limit the number of credit applications you submit. Too many within a short period of time can negatively affect your credit scores. This is because each credit application generally requires a hard credit check which can hurt your credit scores.
- Use A Secured Credit Card – If you can’t qualify for a regular credit card due to bad credit, consider a secured credit card. They simply require a security deposit for approval and payments are reported to the credit bureau(s).
- Remove Errors On Your Credit Report – Errors on your credit report can cause your credit score to be lower than it should. Check your credit report and having any errors rectified may help your credit score bounce back up.
The good news is that the health of your credit may be improved through responsible management of your credit products. Responsible use of your credit cards and loans, over time, may improve your credit score and therefore allow you to qualify for other larger loans, for example, a mortgage, in the future.