What are credit scores?
Credit scores in Canada typically range from 300 to 900. While different lenders and credit bureaus may classify scores slightly differently, here’s a general guideline:
300 - 579: Poor
580 - 659: Fair
660 - 719: Good
720 - 779: Very Good
Above 780: Excellent
In Canada, there are two main credit bureaus: Equifax and TransUnion. Each bureau may calculate your scores differently based on their scoring models, so the scores you receive from each bureau might be different.
Your payment history, credit utilization, length of credit history, types of credit, and recent credit inquiries all contribute to your scores. Lenders use your scores to see if you’re eligible for loans and credit cards.
Why are good credit scores important?
Good credit scores can help you get better interest rates on loans and mortgages, improve your chances of getting approved for a rental, and can even affect employment opportunities.
Though credit scores only show your credit behaviour and payment history. They don’t consider things like income, employment status, or net worth, which are also important parts of your financial health.
What factors may affect my credit scores?
Lot of things can affect your credit scores, including:
Payment history (about 35%)
Credit utilization (amount of credit used compared to credit limits)
Length of credit history
Credit mix (variety of credit accounts)
New credit inquiries
How is credit "built"?
Credit is built by establishing a positive history of borrowing and repaying money. When you make consistent, on-time payments on loans or credit products, this information is reported to credit bureaus, which may have a positive effect on your credit scores over time. Results vary based on individual credit situations.
Who can benefit from credit building?
Credit building can be great for anyone who:
Has no credit history and needs to establish one
Has a limited credit history
Has credit scores they'd like to improve
Recently moved to Canada and needs to build a Canadian credit history