Credit scores in Canada are provided by two major credit bureaus: Equifax and TransUnion. Both agencies calculate scores differently, but they generally fall within the range of 300 to 900. The higher your score, the better your creditworthiness, making it easier to access loans, mortgages, and other financial products at favorable terms. Below is a detailed look at how credit scores work in Canada and which scores are most relevant.
What Range is Used in Canada?
- Excellent: 760 – 900
- Very Good: 725 – 759
- Good: 660 – 724
- Fair: 560 – 659
- Poor: 300 – 559
Lenders use these ranges to assess the risk of lending to you. A good score (660+) usually ensures access to most types of credit, while an excellent score (760+) can help you secure the lowest interest rates.
Which Credit Score Matters Most for Lenders?
- Mortgage Lenders
- For mortgage approval, banks typically look for at least 680.
- A higher score (e.g., 760+) may qualify you for better interest rates.
- Auto Loans and Financing
- Lenders usually approve auto loans with scores above 630.
- Some lenders offer financing to buyers with scores as low as 550, but with higher interest rates.
- Credit Cards
- To qualify for premium credit cards (rewards or cashback cards), you typically need a score above 700.
- Secured credit cards are available for those with scores below 600.
What Affects Your Credit Score?
- Payment History (35%)
- Paying bills on time has the most significant impact. Late payments can quickly lower your score.
- Credit Utilization (30%)
- Keep your credit usage below 30% of your available credit limit.
- Length of Credit History (15%)
- The longer you maintain open accounts, the better for your score.
- Credit Mix (10%)
- A variety of credit types (credit cards, installment loans, mortgages) boosts your score.
- Hard Inquiries (10%)
- Multiple credit applications within a short time can lower your score temporarily.
How to Check Your Credit Score
- Free Services:
- Borrowell and Credit Karma offer free access to your credit score and reports.
- These services provide scores from Equifax or TransUnion.
- Directly from Credit Bureaus:
- You can get a copy of your detailed credit report and score from Equifax and TransUnion Canada (free annually or on-demand for a fee).
Key Takeaways
- Credit score in Canada typically range from 300 to 900, with 660+ considered good and 760+ excellent.
- Both Equifax and TransUnion credit scores are used by lenders, but the score from Equifax may be more frequently referenced for mortgage approvals.
- Regularly monitoring your score and understanding what affects it will help you maintain good credit health and secure better financial products.
Ensuring that your payment history remains positive and maintaining a low credit utilization ratio will steadily improve your credit score over time. Learn more about down payment strategies in Canada
