Your credit score is a three-digit number that summarizes your creditworthiness. In Canada, two credit bureaus — Equifax and TransUnion — calculate and maintain your score. Here’s exactly how it works.
The two credit bureaus
| Feature | Equifax | TransUnion |
|---|---|---|
| Headquarters | Atlanta, GA (Canadian operations in Toronto) | Chicago, IL (Canadian operations in Burlington, ON) |
| Score name | Equifax Risk Score (Beacon) | CreditVision Risk Score |
| Score range | 300–900 | 300–900 |
| Primary scoring model | FICO-based | VantageScore and FICO-based |
| Report format | Different layout than TransUnion | Different layout than Equifax |
| Free score access | Equifax Canada (mail or online — $) | TransUnion (mail — free report, score costs extra) |
| Used by mortgage lenders | Yes — most lenders pull Equifax | Yes — many lenders also pull TransUnion |
Which score do mortgage lenders use?
| Lender Practice | Details |
|---|---|
| Dual-bureau pull | Most mortgage lenders pull both Equifax and TransUnion |
| Score used | Typically the lower of the two scores |
| Co-borrower | Lower score of both applicants is used for qualification |
| B-lenders | May be more flexible about which bureau/score they emphasize |
The five scoring factors
| Factor | Weight | What It Measures |
|---|---|---|
| 1. Payment history | 35% | Whether you pay on time |
| 2. Credit utilization | 30% | How much of your available credit you’re using |
| 3. Length of credit history | 15% | How long your accounts have been open |
| 4. Credit mix | 10% | Variety of credit types (cards, loans, mortgage) |
| 5. New credit inquiries | 10% | Recent applications for new credit |
Factor 1: Payment history (35%)
The single most important factor. Lenders want to see that you pay your bills on time, every time.
| Payment Behaviour | Impact on Score |
|---|---|
| All payments on time | Positive — builds score consistently |
| 1 payment 30 days late | –60 to –110 points |
| 1 payment 60 days late | –80 to –130 points |
| 1 payment 90+ days late | –100 to –150 points |
| Account sent to collections | –50 to –100 points |
| Bankruptcy filed | –150 to –250 points |
| Consumer proposal filed | –100 to –200 points |
What counts as a payment: Mortgages, credit cards, lines of credit, car loans, personal loans, cell phone bills (if reported), utilities (if sent to collections). Not all creditors report positive payment history — but they almost always report negatives.
Factor 2: Credit utilization (30%)
Credit utilization is the ratio of your credit card balances to your credit limits.
| Utilization Level | Impact | Example ($10,000 limit) |
|---|---|---|
| 0%–9% | Best for score | $0–$900 balance |
| 10%–29% | Good | $1,000–$2,900 balance |
| 30%–49% | Neutral to slightly negative | $3,000–$4,900 balance |
| 50%–74% | Negative | $5,000–$7,400 balance |
| 75%–100% | Very negative | $7,500–$10,000 balance |
| >100% (over-limit) | Severely negative | Over $10,000 |
Important nuances:
- Utilization is calculated per card AND as a total across all cards
- The balance reported is typically your statement balance, not your current balance
- Even if you pay in full each month, a high statement balance hurts your score
- Strategy: Pay down balance before statement date, not just before due date
Factor 3: Length of credit history (15%)
| Metric | What It Measures | Good Benchmark |
|---|---|---|
| Average age of accounts | How long all your accounts have been open on average | 7+ years is strong |
| Oldest account age | How long your oldest credit account has been open | 10+ years is excellent |
| Newest account age | How recently you opened an account | Recent openings lower the average |
Why closing old cards hurts: When you close your oldest credit card, your average account age drops and your total available credit decreases (raising utilization). Keep old accounts open, even if rarely used.
Factor 4: Credit mix (10%)
| Credit Type | Category | Counts As |
|---|---|---|
| Credit card | Revolving | ✓ |
| Line of credit | Revolving | ✓ |
| HELOC | Revolving | ✓ |
| Car loan | Installment | ✓ |
| Personal loan | Installment | ✓ |
| Student loan | Installment | ✓ |
| Mortgage | Installment | ✓ |
| Cell phone contract | Other | Sometimes reported |
A healthy mix of 3–5 different credit types is ideal. Having only credit cards or only installment loans limits your score potential.
Factor 5: New credit inquiries (10%)
| Inquiry Type | Impact | Duration on Report |
|---|---|---|
| Hard inquiry (lender checks for approval) | –5 to –10 points per inquiry | 3 years (but impact fades after 12 months) |
| Soft inquiry (you check your own score) | No impact | Not visible to lenders |
| Pre-approval check | Usually soft (verify with lender) | No impact |
| Rate shopping window | Multiple mortgage inquiries within 14–45 days count as one | Treated as single inquiry |
Score ranges and what they mean
| Score Range | Rating | % of Canadians | Mortgage Implications |
|---|---|---|---|
| 800–900 | Exceptional | ~20% | Best rates; instant approvals; premium products |
| 760–799 | Excellent | ~15% | Near-best rates; strong negotiating position |
| 725–759 | Very good | ~15% | All A-lender products available |
| 680–724 | Good | ~15% | A-lender approved; standard pricing |
| 640–679 | Fair | ~12% | Some A-lender access; mostly B-lender |
| 600–639 | Below average | ~10% | B-lender only |
| 550–599 | Poor | ~7% | Limited B-lender; high rates |
| 300–549 | Very poor | ~6% | Private lenders; rebuilding required |
What’s on your credit report
Your credit report contains more than just a score. Lenders review the full report.
Information categories
| Section | What It Contains |
|---|---|
| Personal information | Name, address, date of birth, SIN (last digits), employer |
| Credit accounts | Every credit account — type, opened date, credit limit, balance, payment history |
| Payment ratings | R-ratings (R0 to R9) for revolving credit; I-ratings for installment |
| Public records | Bankruptcies, consumer proposals, judgments, liens |
| Inquiries | Every hard and soft inquiry for the last 3–6 years |
| Collections | Accounts sent to third-party collectors |
| Banking information | NSF cheques, closed accounts due to fraud or misuse |
R-ratings explained
| Rating | Meaning |
|---|---|
| R0 | Too new to rate / approved but not used |
| R1 | Pays as agreed within 30 days — best |
| R2 | 31–59 days late |
| R3 | 60–89 days late |
| R4 | 90–119 days late |
| R5 | 120+ days late but not yet a write-off |
| R7 | Consumer proposal or debt management plan |
| R8 | Repossession |
| R9 | Bad debt / write-off / bankruptcy |
Mortgage lenders want to see R1 on all active accounts. Even a single R2 or R3 requires explanation and may affect approval.
How to check your credit score and report
Free options
| Method | What You Get | Cost | Notes |
|---|---|---|---|
| Equifax by mail | Full credit report (no score) | Free | Request via equifax.ca; takes 5–10 business days |
| TransUnion by mail | Full credit report (no score) | Free | Request via transunion.ca; takes 5–10 business days |
| Borrowell | Equifax score + report | Free | Updated weekly; ad-supported |
| Credit Karma | TransUnion score + report | Free | Updated weekly; ad-supported |
| Your bank’s app | Score (varies by partner) | Free | Many Canadian banks now show scores in app |
Paid options
| Method | What You Get | Cost |
|---|---|---|
| Equifax Complete (online) | Full report + score + monitoring | $19.95/month |
| TransUnion (online) | Full report + score | $8–$28/month |
| Equifax single report + score | One-time report | $23.95 |
Before applying for a mortgage
| Step | Why |
|---|---|
| Check both Equifax and TransUnion reports | Lenders pull both; know what they’ll see |
| Review for errors | 1 in 4 Canadians has at least one error on their report |
| Dispute any inaccuracies | Errors can lower your score by 50–100+ points |
| Check 3–6 months before applying | Gives time to fix issues before the lender pulls credit |
Common credit report errors
| Error Type | How Common | Impact | How to Fix |
|---|---|---|---|
| Wrong account (not yours) | Common, especially with common names | Can lower score significantly | Dispute with bureau (30-day resolution) |
| Incorrect balance | Moderate | Inflates utilization | Dispute with bureau or contact creditor |
| Duplicate account | Occasional | Inflates debt count | Dispute with bureau |
| Paid account showing as unpaid | Common | Prevents score improvement | Contact creditor for correction letter |
| Wrong personal information | Very common | Usually no score impact | Update via bureau website or mail |
| Identity theft / fraudulent accounts | Growing risk | Severe score damage | File fraud alert + police report; dispute accounts |
How to dispute an error
| Step | Action | Timeline |
|---|---|---|
| 1 | Identify the error on your report | — |
| 2 | Gather supporting documents (statements, letters) | — |
| 3 | Submit dispute online (Equifax/TransUnion portal) or by mail | Day 1 |
| 4 | Bureau contacts the creditor for verification | 30 days |
| 5 | Bureau updates your report if error is confirmed | 30–45 days |
| 6 | Verify correction on next report pull | Day 45–60 |