Understanding Credit Scores in Canada

Canada has two main credit bureaus: Equifax and TransUnion. Each calculates your credit score differently, so you may have slightly different scores from each bureau. Most lenders in Canada use scores ranging from 300 (poor) to 900 (excellent).

Your score is based on information in your credit report, which includes your payment history, credit accounts, inquiries, and public records like bankruptcies.

Five main factors influence your Canadian credit score:

1. Payment history (35%): Whether you pay bills on time. Even one late payment can drop your score significantly. 2. Credit utilization (30%): How much of your available credit you're using. Keep this below 30%. 3. Credit history length (15%): How long your accounts have been open. Longer is better. 4. Credit mix (10%): Having different types of credit (credit cards, loans, mortgage) helps. 5. New credit inquiries (10%): Each hard inquiry can temporarily lower your score by a few points.

- 800-900 (Excellent): Best rates and approval odds for any credit product - 750-799 (Very Good): Qualifies for most premium credit cards and best loan rates - 670-749 (Good): Qualifies for most credit products at competitive rates - 580-669 (Fair): May qualify for basic credit products, potentially at higher rates - 300-579 (Poor): Limited options; may need secured products to rebuild

Several free services let you check your credit score in Canada without affecting it:

- Borrowell: Free Equifax score, updated weekly - Credit Karma: Free TransUnion score - Your bank: Many Canadian banks now show your credit score in online banking

Checking your own score is a "soft inquiry" and doesn't affect your score. Only applications for credit (hard inquiries) can lower it.

1. Pay bills on time, every time. Set up autopay for at least the minimum payment. 2. Keep credit utilization low. Try to use less than 30% of your available credit. 3. Don't close old accounts. They help your average account age. 4. Limit applications. Only apply for credit when you genuinely need it. 5. Check for errors. Review your credit report annually for mistakes and dispute any inaccuracies. 6. Use a credit card regularly. Small, regular purchases paid in full each month build a strong payment history.