Credit Score Guide: Understanding Your Credit Score

A credit score is a three-digit number that lenders use to evaluate your creditworthiness. In Canada, the two main credit bureaus — Equifax Canada and TransUnion Canada — generate your score based on the information in your credit report. This guide explains what a credit score is, what affects it, and why it matters when you apply for a mortgage, HELOC, car loan, or any other type of credit. This information is general guidance only and not financial advice.

What Is a Credit Score?

Your credit score summarises your credit history into a single number. Most Canadian credit scores range from 300 to 900. The higher your score, the lower the perceived risk to a lender. A strong credit score can help you qualify for better interest rates and terms on loans and credit cards. A lower score might mean higher rates or difficulty getting approved. Your credit report contains the details — accounts, payment history, public records — that determine your score.

How Is Your Credit Score Calculated?

Credit scoring models vary, but they generally weight the following factors:

• Payment history — whether you pay bills on time (the most important factor)
• Credit utilisation — how much of your available credit you are using
• Length of credit history — how long you’ve had credit accounts
• Types of credit — a mix of instalment loans and revolving credit can help
• New credit inquiries — too many hard inquiries in a short period can lower your score

Hard inquiries occur when you apply for credit and a lender checks your report. Soft inquiries, like checking your own score, do not affect your credit score. In Canada, a consumer proposal or bankruptcy can stay on your report for several years and significantly lower your score.

What Do Different Credit Score Ranges Mean?

While each lender sets its own thresholds, the following ranges are typical in Canada:

These are general guidelines. Each lender uses its own criteria, and a good credit score is only one part of an approval decision. Your income, employment, and debt ratios also matter.

How to Build and Maintain a Good Credit Score in Canada

Improving your credit score takes time and consistent habits. Consider these general steps:

• Pay all bills on time, even minimum payments on credit cards.
• Keep your credit utilisation below 30% of your total available credit.
• Limit new credit applications to avoid multiple hard inquiries.
• Check your credit report from Equifax and TransUnion Canada at least once a year for errors.
• Avoid closing old credit accounts — a longer credit history helps.

If you are struggling with debt, options like a consumer proposal or credit counselling may help. Provincial regulations, such as those in Ontario, govern some lending practices, but your credit score remains the same across Canada.

Common Questions About Credit Scores

Does checking your own credit score hurt it? No. A personal check is a soft inquiry and does not affect your credit score.

How long does a hard inquiry stay on your report? In Canada, most hard inquiries remain on your credit report for 3 to 6 years, though their impact on your score fades after about 12 months.

Can I have more than one credit score?Yes. Equifax and TransUnion Canada calculate scores differently, and lenders may also use their own internal scoring models. Your score can vary between bureaus.