What hurts your credit score the most in Canada?

Missing a payment is the single most damaging action — payment history is 35% of your credit score. A single missed payment (30+ days late) can drop an otherwise excellent score by 60–100 points and remains on your credit file for 6–7 years. The second most damaging ongoing state is carrying very high credit card balances (above 50–75% utilization), which suppresses your score every single month the balances remain high.

Does closing a credit card hurt your credit score in Canada?

Yes. Closing a credit card reduces your total available credit (increasing utilization), and if it is your oldest card, it reduces your average account age. The combined impact can be 10–30 points depending on your credit profile. The older and more established the account, the greater the damage from closing it. Only close a card if it charges an annual fee you cannot justify — and even then, consider downgrading to a no-fee product with the same lender rather than closing entirely.

How long does a missed payment stay on your credit report in Canada?

A missed or late payment remains on your Equifax and TransUnion credit report in Canada for approximately 6–7 years from the date of the delinquency. The score impact is highest in the first 2 years and fades progressively. By year 4–5, the impact is much reduced; by year 6–7, it is minimal. The record disappears entirely when the retention period expires.

Does applying for too many credit cards hurt your credit score in Canada?

Yes. Each credit card application triggers a hard inquiry, which temporarily reduces your score (typically 5–10 points each). Applying for multiple cards within a short period signals financial stress to scoring models and reduces your average account age as new accounts are opened. Multiple applications over 3–6 months can collectively drop a score by 20–40 points. As a guideline, apply for new credit no more than once every 6–12 months.

Does a consumer proposal hurt your credit score in Canada?

Yes, significantly. A consumer proposal (a legal debt settlement alternative to bankruptcy) is noted on your Equifax and TransUnion credit reports for 3 years after it is fully paid and discharged, or 6 years from the date it was filed — whichever comes first. During this period, it is a major negative mark that disqualifies you from most mainstream credit products. After discharge and the retention period, the record is removed and your score can rebuild fully.

What Hurts Your Credit Score in Canada: Ranked by Impact (2026)

What Hurts Your Credit Score: Ranked by Severity

Rank	Action / Situation	Immediate Score Impact	Time on File
1	Missed payment (30+ days late)	−60 to −110 points	6–7 years
2	Collection or charge-off	−80 to −150 points	6–7 years
3	Bankruptcy	−130 to −200 points	6–7 years after discharge
4	Consumer proposal	−80 to −130 points	3 yrs after discharge or 6 yrs from filing
5	Very high utilization (75–100%)	−30 to −80 points	Ongoing — recalculates monthly
6	Judgment / legal order	−50 to −100 points	6–7 years
7	High utilization (50–75%)	−15 to −40 points	Ongoing
8	Closing oldest credit card	−10 to −30 points	Permanent account age change
9	Multiple hard inquiries in 3–6 months	−5 to −15 per inquiry	3 years
10	Opening many new accounts at once	−5 to −20 (account age reduction)	Gradual recovery as accounts age

1. Missed Payments — The Largest Damage

Missing a payment by 30 or more days is the most damaging event in credit scoring. Payment history is 35% of your score — the heaviest single factor.

Days Late	Impact	Bureau Notation
1–29 days	Not reported to bureaus — zero impact	None
30 days	First reporting threshold — significant hit	R2 / I2 rating
60 days	Larger hit; pattern of missed payments flagged	R3 / I3
90 days	Severe; collection risk flagged by lender	R4 / I4
120+ days	Lender may charge off or send to collections	R5 / I5

R1 is perfect (paid on time). R9 is the worst (written off as bad debt). Most lenders require R1 payment history on your existing accounts for approval.

Recovery from a Missed Payment

Time Since Event	Score Recovery Status
0–12 months	Severe; new credit very difficult
12–24 months	Score begins recovering with clean history
24–36 months	Meaningful recovery; many products accessible
36–48 months	Strong recovery; impact reduced substantially
6–7 years	Drops off report entirely

2. Collection Accounts

A collection account is created when a lender writes off your debt as uncollectable and sells it to a collection agency. The collection agency then creates a new tradeline on your credit file.

Key facts:

Even paying a collection account does not remove it — it becomes “paid collection” but stays on file
Both the original lender’s tradeline AND the collection agency’s tradeline may appear
Collection accounts suppress mortgage and car loan approvals more than other products

3. Bankruptcy

A personal bankruptcy in Canada is the most severe credit event with the longest-lasting consequences:

Bankruptcy Type	On Report	After Discharge
First bankruptcy	6–7 years from discharge	Clean start (depending on province)
Second bankruptcy	14 years from discharge	Longer recovery period

During bankruptcy and the post-discharge retention period, most mainstream lenders will not advance credit. Rebuilding begins after discharge with secured cards and credit-builder products.

4. Consumer Proposal

A consumer proposal is less damaging than full bankruptcy but still a significant negative mark:

Filed to avoid bankruptcy; allows debt repayment on negotiated terms
Noted as “consumer proposal” on credit file
Stays for 3 years after completion or 6 years from filing
Many borrowers successfully rebuild to 700+ within 2–3 years after completion

5. High Utilization (Ongoing Suppression)

Unlike missed payments, high utilization has no permanent history — but it suppresses your score every single month it persists. The damage is immediate and ongoing, but also the fastest to recover from once balances are paid down.

A borrower with 90% utilization on all cards but perfect payment history often has a score of 580–640 — lower than the utilization alone would suggest, creating a meaningful ceiling on score growth.

6. Closing Credit Cards

When you close a credit card:

Effect 1 — Reduced available credit:

If you had $20,000 total limit across 4 cards and close one with $5,000 limit, your available credit drops to $15,000
If you carry any balance, your utilization ratio increases

Effect 2 — Account age:

If the closed card was your oldest, your average account age drops
If it was your second-oldest, impact is smaller; if a recent card, minimal

Never close your oldest card. If it has an annual fee, call and ask for a downgrade to a no-fee version.

7. Multiple Hard Inquiries

Each credit card application, mortgage application, or loan application creates a hard inquiry:

Number of Inquiries in 12 Months	Score Impact
1	Minor (5–10 pts)
2–3	Moderate (10–25 pts)
4–6	Significant pattern flagged (25–50 pts)
7+	Severe; signals financial desperation

Exception: Multiple mortgage or auto loan inquiries within 14–45 days count as one inquiry.

8. Having No Credit Activity

A thin credit file (no accounts, or all accounts inactive) is not the same as a bad score — but it prevents you from qualifying for most credit products. Some people mistakenly believe living debt-free with no credit products has no downside; in practice, having no credit history prevents accessing mortgages, competitive insurance rates, and some rentals.

How Long Each Negative Stays on Your Credit Report

Item	Equifax (Alberta, ON, BC, etc.)	TransUnion
Missed payment	6 years from date	6–7 years
Collection	6 years from date	6 years
Judgment	6 years from date	6 years
Bankruptcy (1st)	6–7 years from discharge	6–7 years
Consumer proposal	3 years after completion / 6 years from filing	Same
Hard inquiry	3 years	3 years
Fraud alert	Until removed by you	Until removed

Note: Retention periods vary slightly by province. Quebec has shorter retention periods for some items.

The One Thing That Always Helps

Regardless of what has happened in your credit history, the single most consistent score-improver is:

Pay every account on time, every month, from this point forward.

Every on-time payment adds positive history. Every month without a new negative event lets the old ones fade. Credit scores are designed to reflect current creditworthiness — they reward consistent improvement over time.