A credit score drops when your credit report shows something lenders read as risk: payments that arrive late or not at all, debts that go to collections or insolvency, balances close to your limits, or a burst of new applications. This page is the preventive view: what hurts a score before it happens, ordered roughly from the most lasting damage to the least. If your score has already fallen and you want to find out why, why your credit score dropped walks through diagnosing a drop. Both pages belong to our credit score guides.
The Financial Consumer Agency of Canada (FCAC) notes that “Credit bureaus and lenders use different formulas to calculate your score, but they don’t share the exact details.” No one outside the bureaus can say exactly how many points a given event costs. What is published is which habits matter and how long each negative item stays on file, and that is what the ranking below is built on.
The ranking at a glance
| Item | Why lenders see it as risk | How long it stays on your report |
|---|---|---|
| Bankruptcy | A legal process for debt you can’t repay | 6 years after discharge (7 at TransUnion in Newfoundland and Labrador, Ontario, Prince Edward Island and Quebec); 14 years if you declare bankruptcy more than once |
| Consumer proposal | You agreed with creditors to repay part of your debt | 3 years after the debts in it are paid off, or 6 years after you sign it, whichever comes first |
| Missed or late payments | Payment history is “the most important part of your credit score” (FCAC) | Up to 6 years for late or unpaid credit cards and loans |
| Accounts sent to collections | The lender passed an unpaid debt to a collection agency | FCAC lists it as negative information; late or unpaid accounts stay up to 6 years |
| Court judgments | A court decided you owe the money | Usually 6 years; longer at TransUnion in some provinces |
| Debt management plan | A credit counsellor arranged repayment with your creditors | Removed 2 years after you finish paying |
| Balances close to your limits | Heavy reliance on borrowed money | Changes as your reported balances change; bureaus update your report at least once a month |
| Closing your oldest accounts | Less credit history and less available credit | A closed account in good standing stays up to 10 years at Equifax; TransUnion keeps positive information up to 20 years |
| Many applications close together | Can look like urgently seeking credit | Hard inquiries stay 3 years at Equifax and 6 years at TransUnion |
Retention periods are from FCAC’s guide to how long information stays on your credit report. The first six rows are records of past events, kept for up to the periods shown. The last three reflect how you use credit now, so they can change from one month to the next as your accounts change.
Insolvency: bankruptcy and consumer proposals
A bankruptcy or a consumer proposal is the longest-lasting record most people will ever have on a credit report. Both are set up by a Licensed Insolvency Trustee, and the choice between them changes how long the record lasts. How long a bankruptcy stays on your credit report has the bureau-by-province detail, and rebuilding credit after bankruptcy covers the recovery.
Missed payments
Payment history is the part of your score FCAC calls the most important, so a bill that goes unpaid reaches the factor that counts most. FCAC’s guidance is to make at least the minimum payment when you can’t pay the full amount, and to keep paying while a charge is in dispute (“don’t skip a payment even if you’re disputing a charge”). What a missed credit card payment triggers, from fees and a higher interest rate to the entry on your report, is covered on its own page.
Collections and judgments
When a lender sends an unpaid debt to a collection agency, the collection shows on your report alongside the account’s late payments, and a court judgment for the debt adds a separate record. If a collection or judgment on your report isn’t yours or is wrong, disputing a credit report error explains how to have it corrected.
Debt management plans
A debt management plan is an informal agreement a credit counsellor sets up so you repay several debts with one monthly payment. The bureaus remove it a set time after you finish paying, shown in the table above.
High balances
Lenders look at how much of your available credit you use. FCAC’s tip is to “Try to use less than 30% of your total credit limit,” and it warns that regularly using a lot of your credit can make lenders see you as a higher risk “even when you pay off your debts in full every month.” Because the bureaus update your report at least once a month, this is also the item that can recover soonest once balances come down. Credit utilization explains how the ratio is measured and when card balances are reported.
Closing old accounts
FCAC says closing an older account makes you “lose older credit history” and “reduce your available credit,” which raises the share of your remaining limits that your balances use. Whether that matters for you depends on how old the card is and how much of your total limit it carries; does closing a credit card hurt your credit score works through when closing is fine.
Applying for a lot of credit at once
An application for a card, loan or mortgage lets the lender pull your report, and that pull is recorded as a hard inquiry. The occasional application is expected. A cluster of them is what worries lenders, because in FCAC’s words it can suggest you’re “urgently seeking credit” or “spending beyond your means.” Car loan and mortgage shoppers get some leeway: quotes collected over two weeks are counted as a single inquiry. Soft vs hard credit checks explains which checks count, and how long a hard inquiry stays on your credit covers how its effect fades.
A limited credit history
Having little or no credit on file isn’t a negative record, but it still limits what you can get: FCAC notes that “A poor or limited credit history may make it harder to borrow money or get a credit card.” It also notes “You may have a lower credit score if you only have 1 type of credit product.” Building credit from scratch covers the products that create a history in your name.
Things that don’t hurt your score
- Checking your own report or score. FCAC: “Checking your own credit report or score doesn’t affect your credit score.” The free ways to check your credit score don’t count as applications.
- Soft inquiries, such as a company you already deal with reviewing your file to update its records, appear only on the version of the report you see and “don’t affect your credit score.”
What helps the most
Most of the damage above traces back to one of two things: payments that didn’t arrive on time, or debt that grew past what could be repaid. The habits FCAC lists for improving your credit score are the mirror image of this page: pay on time, keep balances low relative to your limits, keep older accounts open and apply for new credit only when you need it. Checking your reports with Equifax and TransUnion now and then also “may help you detect signs of fraud or identity theft,” in FCAC’s words, before a wrong entry does lasting harm.
Sources
The figures and rules on this page come from these sources, last checked against them on September 25, 2026. How we check facts.
- Financial Consumer Agency of Canada: How long information stays on your credit report