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
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%)
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
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 |