What is a credit score?
Two credit bureaus, Equifax Canada and TransUnion Canada, keep a credit report on you: your cards, loans, lines of credit and whether you’ve paid on time. A credit score sums that up as a number from 300 to 900. Lenders, landlords and some employers (with your permission) look at it.
A better score means better rates, especially on a mortgage, and makes it easier to be approved at all.
What affects your score
- Payment history: paying at least the minimum on time, every time, matters most. A payment 30 or more days late hurts.
- How much of your credit you use: keeping card and line-of-credit balances well below their limits.
- How long you’ve had credit: older accounts help.
- New applications: several in a short time can lower your score.
- The mix of credit: having different kinds, managed well.
Credit utilization
The amount you owe on cards, as a share of your total limits, is the quickest thing to change. Try it:
30%
Good
Under about a third is fine for most scores.
A rule of thumb: scoring models differ, and paying on time matters most.
How to raise your score
- Never miss a payment. Set up an automatic payment for at least the minimum.
- Pay your card down before the statement date, since that’s the balance that’s reported.
- Keep your oldest card open, even if you rarely use it.
- Apply for new credit only when you need it.
- Check your reports for mistakes, and ask the bureau to correct them.
Check yours for free
You can get your credit report free from Equifax Canada and TransUnion Canada, online or by mail, and many banks show your score in their app. Checking your own report or score is a soft check, so it never lowers it.
Starting from nothing
New to Canada or to credit? A secured credit card, a student card or a small credit-builder product from your bank can start your history. Use it a little and pay it off in full every month.
For a step-by-step plan, see how to build credit from scratch.