Your credit score is a three-digit number between 300 and 900 that determines what you can borrow, at what interest rate, and sometimes whether you can rent an apartment or pass an employment background check. In Canada, two credit bureaus — Equifax and TransUnion — each maintain a separate file on your credit history and calculate their own score. Lenders can pull from either bureau or both, and the scores between the two can differ by 20–50 points for the same person at the same time, since not all lenders report to both bureaus. This guide is part of the Canadian credit scores hub.
The score itself is a compressed representation of five factors: payment history (35%), credit utilization (30%), length of credit history (15%), credit mix (10%), and new credit inquiries (10%). Two of those factors — payment history and utilization — account for 65% of the score, which means most of the practical work of improving a credit score comes down to paying on time and keeping credit card balances low. Everything else is secondary.
Understanding your credit score matters most at the decision points where it directly costs or saves you money: applying for a mortgage, refinancing a car loan, or taking out a line of credit. A score difference of 60 points — from 660 to 720 — can mean the difference between a standard rate and a preferred rate on a $500,000 mortgage, and that gap compounds to tens of thousands of dollars over a five-year term.
Credit Score Ranges in Canada
Both Equifax and TransUnion score on the same 300–900 scale in Canada. The labels attached to ranges vary slightly by bureau and by lender, but the practical thresholds are consistent.
| Range | Rating | Practical Meaning |
|---|---|---|
| 800–900 | Exceptional | Best rates on all products; automatic approvals |
| 760–799 | Excellent | Preferred rates; any product available |
| 725–759 | Very good | Competitive rates; most products available |
| 660–724 | Good | Standard rates; full access to mainstream products |
| 560–659 | Fair | Higher rates; some products restricted; may need secured products |
| 300–559 | Poor | Difficulty qualifying for standard products; subprime or secured only |
Most Canadians have scores between 650 and 750. The average credit score in Canada sits around 680 — which qualifies for most mainstream credit products at standard rates, but not at the best available rates.
The thresholds that matter most in practice: 600 is the minimum for an insured mortgage (CMHC-backed); 680 is the effective A-lender floor for mortgage approvals; 720 is the point at which most lenders offer their best pricing across all product categories.
How Credit Scores Are Calculated
Both Equifax and TransUnion use proprietary scoring models, but the five underlying factors and their approximate weights are publicly disclosed and are consistent across both bureaus.
| Factor | Approximate Weight | What It Measures |
|---|---|---|
| Payment history | 35% | Whether you pay on time |
| Credit utilization | 30% | How much of your available credit you use |
| Length of credit history | 15% | How long your accounts have been open |
| Credit mix | 10% | Variety of credit types (cards, loans, mortgage) |
| New credit inquiries | 10% | How often you apply for new credit |
Payment history is the single most important factor. One missed payment reported to the bureaus (typically at 30+ days past due) can drop a score of 700+ by 50–100 points. The impact is asymmetric — it takes months of consistent on-time payments to recover what one missed payment removes in a single month. Automatic minimum payments on every account eliminate this risk at no cost.
Credit utilization is the percentage of your revolving credit limit you are currently using, calculated both per card and across all cards combined. Utilization above 30% begins to pull the score down; utilization above 60% causes significant damage. A balance of $3,000 on a card with a $5,000 limit is 60% utilization — even if all your other cards are at zero. The fastest single lever for improving a credit score is paying down card balances. Requesting a credit limit increase on an existing card has the same effect on the ratio without requiring you to pay down debt.
Length of credit history rewards keeping old accounts open. The score uses the age of your oldest account, the age of your newest account, and the average age across all accounts. Closing your oldest credit card shortens your history and can reduce your score by 10–30 points, with the impact persisting for years. If a card has an annual fee you no longer want to pay, ask the issuer to downgrade it to a no-fee version — this preserves the age of the account without the ongoing cost.
Credit mix benefits borrowers who have both revolving credit (credit cards, lines of credit) and installment credit (car loans, mortgages, personal loans). The benefit is modest — 10% of the score — and taking on debt solely to improve mix is not worthwhile. But if you are considering a needed loan, knowing that it also marginally helps your credit score removes one objection.
New credit inquiries cause a small, temporary drop of 5–10 points per hard inquiry. Inquiries fade from the score after 6 months and are removed from the credit report after 2 years. Rate shopping for a mortgage or car loan is protected: multiple inquiries for the same type of credit within a 14–45 day window are grouped as one inquiry by both bureaus.
Credit Utilization in Practice
| Credit Limit | Balance | Utilization | Score Impact |
|---|---|---|---|
| $10,000 | $500 | 5% | Excellent |
| $10,000 | $2,000 | 20% | Good |
| $10,000 | $3,000 | 30% | Acceptable — beginning to affect score |
| $10,000 | $5,000 | 50% | Moderate damage |
| $10,000 | $7,000 | 70% | Significant damage |
Utilization is calculated at the time the lender reports to the bureau — typically your statement close date, not your payment due date. This means your utilization appears high even if you pay the balance in full every month, if your statement closes when you have a large balance. Paying the balance before the statement close date (not just the due date) keeps reported utilization low.
How to Check Your Credit Score for Free
| Service | Bureau | Cost | Update Frequency |
|---|---|---|---|
| Borrowell | Equifax | Free | Weekly |
| Credit Karma | TransUnion | Free | Weekly |
| RBC, TD, BMO, Scotiabank, CIBC online banking | Varies by bank | Free | Monthly |
| Equifax Canada (report only) | Equifax | Free (report) | On request |
| TransUnion Canada (report only) | TransUnion | Free (report) | On request |
Checking your own score through any of these services is a soft inquiry — it has no impact on your score. The full credit report (not just the score number) is available free from both Equifax Canada and TransUnion Canada by mail; the online version with the score costs $19.99/month through each bureau directly.
Check your full credit report at least once per year to catch errors — incorrect late payments, accounts that are not yours, or collections you have already paid. Errors on credit reports are more common than most Canadians assume, and disputing them is the fastest way to improve a score damaged by inaccurate information. See How to Dispute a Credit Report Error for the process.
How to Improve Your Credit Score
The fastest improvements come from the two highest-weighted factors: payment history and utilization. Everything else is slower-moving and less impactful in the short term.
Pay down credit card balances first. Reducing utilization from 70% to 20% can improve a score by 40–80 points within one or two statement cycles — one of the fastest score improvements available without changing anything else. If you have multiple cards, prioritise paying down the card closest to its limit first (even if it does not carry the highest interest rate), since per-card utilization is scored separately from overall utilization.
Set up automatic minimum payments on every account. A single missed payment does more damage than months of on-time payments can repair. Automatic minimums ensure you never miss a payment due to oversight — you can always pay more manually, but the automatic minimum is the safety net that prevents the worst-case outcome.
Dispute errors on your credit report. If your report shows a late payment you never made, an account you do not recognise, or a collection that has already been paid, disputing it through Equifax or TransUnion is free and can remove the negative item within 30–45 days. Start at the Equifax Canada or TransUnion Canada websites and file online; provide documentation (bank statements, payment confirmations) where available.
Request a credit limit increase without spending more. If your credit card issuer grants a limit increase, your utilization ratio drops immediately — the same balance against a higher limit. Most banks allow an online request without a hard inquiry if the increase is modest. A utilization drop from 60% to 35% from a limit increase alone can lift your score meaningfully in one cycle.
Keep old accounts open. Closing a card shortens your credit history and reduces your total available credit — both actions hurt the score. If a card has an annual fee you want to eliminate, call the issuer and ask about a product downgrade to a no-fee version. The account age is preserved; the fee disappears.
| Action | Timeline | Score Impact |
|---|---|---|
| Pay down card balances (70% → 20% utilization) | 1–2 statement cycles | High (40–80 points) |
| Set up automatic payments | Immediate (prevents damage) | High (preventive) |
| Dispute and remove credit report error | 30–45 days | High if error is negative |
| Request credit limit increase | 1 statement cycle | Medium |
| Keep old accounts open | Ongoing | Medium (prevents loss) |
| Become an authorised user on family member’s old card | 1–2 months | Medium |
| Open a secured credit card (thin file) | 6–12 months | Medium (builds history) |
What Damages Your Credit Score
| Event | Score Impact | Duration on Report |
|---|---|---|
| Late payment (30+ days) | −50 to −100 points | 6 years |
| Collection account | −80 to −150 points | 6 years |
| Consumer proposal | Severe | 3 years after completion or 6 years from filing (whichever is first) |
| Bankruptcy (first) | Severe | 6–7 years after discharge |
| Maxing out a credit card | −20 to −50 points | Until balance is reduced |
| Hard inquiry | −5 to −10 points | 2 years (fades after 6 months) |
| Closing oldest credit card | −10 to −30 points | Gradual, over months |
See What Hurts Your Credit Score in Canada for a full breakdown of each factor, including the distinction between permanent damage and recoverable damage.
Credit Score Requirements by Product
Different lenders and product categories apply different minimum scores. These are the effective thresholds in the Canadian market as of 2026 — individual lenders may vary.
| Product | Minimum Score | Best-Rate Score |
|---|---|---|
| Insured mortgage (CMHC/Sagen) | 600 | 720+ |
| Conventional mortgage (A-lender) | 680 | 720+ |
| B-lender mortgage | 550–600 | N/A |
| Car loan (prime rate) | 650 | 700+ |
| Standard credit card | 650 | 680+ |
| Premium credit card (Infinite/World Elite) | 700 | 750+ |
| Unsecured line of credit | 650 | 700+ |
| HELOC | 680 | 720+ |
For mortgages specifically, the credit score is one of multiple qualification factors — lenders also assess your gross debt service ratio (GDS), total debt service ratio (TDS), down payment, and employment stability. See What Credit Score Do You Need for a Mortgage in Canada for a detailed breakdown by lender type and score band.
Building Credit from Scratch
If you are new to Canada or have never had credit in any country, you have no Canadian credit file — not a bad score, but an absent one. The path from no file to a usable score takes 6–12 months and follows a straightforward sequence.
Start with a secured credit card. A secured card requires a cash deposit (typically $200–$500) that becomes your credit limit. Most banks in Canada offer them, and approval does not require an existing credit history. Use the card for one or two small, recurring purchases per month — a grocery trip, a streaming subscription — and pay the full balance before the statement close date every month. This builds a payment history with near-zero utilization, which is the optimal signal for the scoring model.
After 6 months of consistent on-time payments, apply for an entry-level unsecured credit card. After 12 months total, your score should be in the 650–700 range — enough for most mainstream credit products. A credit-builder loan from a credit union is a useful complement if you want to add an installment account to your mix during this period.
For newcomers to Canada, TD, RBC, and Scotiabank offer dedicated newcomer banking packages that include a starter credit card without requiring Canadian credit history. These bypass the initial secured card step and are worth exploring before opening a secured product.