Your credit score is a three-digit number between 300 and 900 that determines whether you get approved for a mortgage, credit card, or car loan - and at what interest rate. A 50-point difference can mean thousands of dollars more or less in interest over the life of a mortgage. The good news: your score is entirely within your control. It’s built from five factors, and two of them (payment history and utilization) account for 65% of the number. Master those two and your score will take care of itself. You can check it for free at any time through Borrowell (Equifax) or Credit Karma (TransUnion) without any impact on your score.
For a full framework that compares all Canadian scoring concepts in one place, see the Credit Scores Hub.
What is a Credit Score?
The Basics
Feature
Details
Range
300-900
Higher =
Better creditworthiness
Used for
Loans, mortgages, credit cards
Calculated by
Equifax and TransUnion
Why It Matters
For
Impact
Mortgage
Approval and interest rate
Credit cards
Approval and limits
Car loans
Interest rate
Renting
Landlords may check
Some jobs
Employers may check
Credit Score Ranges
Canada Credit Score Tiers
Range
Rating
What It Means
800-900
Excellent
Best rates, easy approval
760-799
Very Good
Most products available
725-759
Good
Most products, good rates
660-724
Fair
May get approved, higher rates
560-659
Poor
Limited options
300-559
Very Poor
Likely declined
Average Canadian Score
Statistic
Score
Average
~680-710
Median
~720
What Affects Your Score
Your credit score is calculated from five factors, each weighted differently. Payment history (35%) and credit utilization (30%) together control nearly two-thirds of your score, which means paying on time and keeping balances low are far more important than the other three factors combined. Credit history length (15%) rewards patience — keeping your oldest card open helps even if you rarely use it. Credit mix (10%) means having both revolving credit (credit cards) and installment credit (loans) is better than having only one type. New credit (10%) penalizes applying for too many products at once.
The Five Factors
Factor
Weight
Impact
Payment history
35%
Biggest factor
Credit utilization
30%
Keep under 30%
Credit history length
15%
Longer is better
Credit mix
10%
Variety helps
New credit inquiries
10%
Too many hurts
Payment History (35%)
Most Important Factor
Action
Impact
On-time payments
Positive
Late payment (30+ days)
Negative
Missed payment
Very negative
Collections
Very negative
Bankruptcy
Severe negative
How Long Things Stay
Event
Remains On Report
Late payment
6 years
Collections
6 years
Consumer proposal
3 years after completion
Bankruptcy (first)
6-7 years
Bankruptcy (second)
14 years
Credit Utilization (30%)
Utilization is the second most important factor and the one most people get wrong. It measures how much of your available credit you’re using. If you have a $10,000 limit and carry a $3,000 balance, your utilization is 30%. The sweet spot is under 10% — which means using your card regularly but paying most of it off before the statement date. Requesting a credit limit increase (without increasing spending) is one of the fastest ways to improve your score because it lowers your utilization ratio instantly.
What It Is
Calculation
Example
Balance ÷ Credit Limit
$3,000 ÷ $10,000 = 30%
Optimal Utilization
Utilization
Impact
0-10%
Excellent
11-30%
Good
31-50%
Fair
Over 50%
Hurts score
Over 75%
Significant drop
Tips to Improve
Strategy
Action
Pay before statement
Lower reported balance
Request limit increase
Same balance, lower %
Multiple cards
Spread out usage
Pay twice a month
Keep balance low
Credit History Length (15%)
Age of Accounts
Factor
Impact
Average age
Important
Oldest account
Very important
New accounts
Lower average
Strategy
Do
Don’t
Keep old accounts open
Close your oldest card
Use old cards occasionally
Let them go inactive
Be patient
Expect quick improvement
Credit Mix (10%)
Types of Credit
Type
Example
Revolving
Credit cards, LOC
Installment
Car loan, mortgage
Both types
Shows you can manage
New Credit (10%)
Hard vs Soft Inquiries
Hard Inquiry
Soft Inquiry
You applied for credit
Checking own score
Affects score
No effect
Stays 2-3 years
Not reported
Multiple Applications
Situation
Impact
Many applications quickly
Looks risky
Rate shopping (mortgage/car)
Often grouped as one
How to Check Your Score
Checking your own score is a “soft inquiry” and has zero impact on your number — so check it as often as you want. Borrowell shows your Equifax score weekly, Credit Karma shows TransUnion, and most major bank apps now include a score in the dashboard. It’s worth checking both Equifax and TransUnion because they may show different scores — not all creditors report to both bureaus, and the scoring models differ slightly. If you find errors, dispute them immediately because even small mistakes can cost you points.
Free Options
Service
Score Type
Features
Borrowell
Equifax
Free, weekly updates
Credit Karma
TransUnion
Free, monitoring
Bank apps
Varies
Often included
Official Reports
Bureau
How to Get
Equifax
equifax.ca (free by mail)
TransUnion
transunion.ca (free by mail)
Why Two Scores?
Bureau
May Differ
Equifax
Different data reported
TransUnion
Different calculation
Check both
See complete picture
Improving Your Credit
Quick Wins (1-2 Months)
Action
Impact
Pay down card balances
Lower utilization
Set up automatic payments
Never miss payment
Become authorized user
On family member’s card
Pay bills on time
Build positive history
Medium-Term (3-12 Months)
Action
Impact
Keep cards active
Use and pay monthly
Request limit increases
After 6 months good history
Get secured card
If rebuilding
Don’t close old cards
Preserves history
Long-Term (1+ Years)
Action
Impact
Maintain good habits
Consistent improvement
Diversify credit
Add installment loan
Wait for negatives to drop
After 6 years
Building Credit from Zero
If New to Credit
Step
Action
1
Get a secured credit card
2
Use 10-20% of limit
3
Pay full balance monthly
4
After 6-12 months, upgrade
Secured Card Basics
Feature
Details
Deposit required
Usually $300-500
Becomes your limit
$300 deposit = $300 limit
After 6-12 months
May convert to unsecured
Reports to bureaus
Builds credit
Credit Score Myths
Common Misconceptions
Myth
Truth
Carrying a balance helps
No—pay in full
Checking score hurts it
No—soft inquiry
Income affects score
No—not directly
Closing cards helps
No—often hurts
You need to pay interest
No—never needed
Credit Score by Life Stage
Targets
Age
Reasonable Goal
18-25
650+ (building)
25-35
700+ (established)
35+
750+ (optimized)
Credit Score for Major Purchases
Mortgage Requirements
Score
Typical Result
760+
Best rates
680-759
Good rates
640-679
May qualify, higher rate
Under 640
May need alternative lender
Credit Card Approvals
Card Type
Typical Minimum
Basic rewards
650+
Premium rewards
700+
Travel elite
750+
Checking Your Credit Report
What to Look For
Item
Action
Errors
Dispute with bureau
Wrong accounts
Not yours—possible fraud
Incorrect balances
Report to bureau
Closed accounts
Should show closed
How to Dispute Errors
Step
Action
1
Get report from Equifax/TransUnion
2
Identify errors
3
File dispute online or mail
4
Bureau investigates (30 days)
5
Errors corrected
The Bottom Line
Your credit score comes down to two things: pay on time (every time) and keep your utilization under 30% (ideally under 10%). Everything else — credit mix, history length, new inquiries — matters far less. Check your score regularly for free, dispute any errors, and don’t close old accounts. Start now, and a score of 750+ is achievable within 12–24 months for most Canadians.