What Is a Good Credit Score in Canada?

Before a lender lends you money, they look at your creditworthiness before deciding to do business with you.

A credit score allows lenders to measure your trustworthiness when you apply for credit cards, loans and other credit products.

What is a good credit score in Canada? Let’s look at some typical credit score ranges and what they mean.

What is a credit score?

Your credit score is a three-digit number ranging from 300 and 900 that summarizes your financial health using information from your credit report.

The higher the score, the more likely you will be accepted for credit like loans, credit cards and mortgages. Credit score ranges differ slightly depending on whether you use Equifax or TransUnion to check your score.

Credit score ranges in Canada

Credit score ranges categorize your score into five categories: poor, fair, good, very good and excellent. Your score determines what credit products you qualify for.

The scoring system and range used will vary depending on which credit bureau you use. Other factors determine creditworthiness, such as your income.

What is a good credit score in Canada?

A good credit score in Canada is 660 or higher. Using Equifax’s credit scoring model, a credit score in the 660 to 724 range is considered good.

Credit scores from 725 to 759 are very good, and 760 and higher are considered excellent. Anything between 300 and 559 is a poor credit score.

TransUnion uses a different scoring model. TransUnion describes a good credit score as one that helps you achieve your goals, but 650 or more is considered good, while a score of between 800 and 900 is excellent.

Everyone’s situation is different, and there’s no magic number for credit scores; they are just a guide. All lenders have different qualifying criteria. Additionally, credit bureaus use different scoring models, so your score varies depending on whether you are using Equifax or TransUnion.

Creditors also look at other factors to assess your application, including your employment status, income and debt-to-income ratio status.

Is 500 a good credit score?

500 is a poor credit score. You are considered a subprime borrower, which makes it difficult to access credit from traditional lenders.

Is 550 a good credit score?

550 is a poor credit score. You are considered a subprime borrower, and it won’t be easy to access credit from traditional lenders. You may only qualify for alternative lenders, who may request a down payment or charge unfair fees. You may also need to provide collateral as security.

Is 600 a good credit score?

600 is a fair credit score, you are considered a subprime borrower, and it won’t be easy to access credit products. You may have to make a down payment or provide collateral as security to access credit, and you may have to use alternative lenders.

Is 650 a good credit score?

650 is a good credit score. You are a near-prime borrower, meaning you can typically access credit at a higher interest rate and less flexible terms than a prime borrower.

Is 700 a good credit score?

700 is a good credit score. You are classed as a near-prime borrower that will likely allow you to access credit, but you may have to compromise by accepting a higher interest rate and less flexible terms than a prime borrower.

Is 750 a good credit score?

750 is a very good credit score. You are considered a prime borrower, meaning that a wide variety of competitive credit offers should be available.

Is 800 a good credit score?

800 is an excellent credit score. You are a super-prime borrower, which means that you pose the least risk to lenders and creditors. Lenders consider a credit score of 800 as excellent.

With this credit score, you should have no problem accessing the best credit products and benefit from lower interest rates, higher credit limits and the best terms.

How are credit scores calculated?

Your credit score is made up of the following factors:

Your payment history (35%): How you manage payments. Are they on time or late? How often do you pay? Is there a solid payment history?

Your credit utilization ratio (30%): Your credit score considers how much credit you use compared to the total available credit.

The length of your credit history (15%): The age of your credit accounts and the average age of all your accounts affects your overall score.

Public records (10%): Public records appear on your credit report if you have accounts in collections, file for bankruptcy or have a lien placed on your property. All negatively affect your credit score.

The number of inquiries into your credit file (10%): When a lender checks your credit report, a hard or soft inquiry is recorded in the inquiries section of your credit report. Only hard inquiries impact your credit score.

What impacts your credit score?

Credit scores are calculated using an algorithm that examines your payment history, how much debt you use, the length of your credit history, public records and inquiries in your credit report.

Creditors and lenders will perform a credit check to view your credit score. This lets them determine the risk of offering you credit (e.g. a loan or credit card) and decide whether they think you will repay it.

A high score demonstrates that you are a responsible borrower who has a good history of managing credit.

Why do credit scores go up and down?

Your credit score goes up and down based on the financial decisions you make:

• When you use credit responsibly, your credit score goes up.
• When you have difficulty managing credit, your credit score goes down.

What makes your credit score go up?

• Paying your bills on time.
• Making multiple payments on time each month.
• Using less than 30% of your available credit limits.
• Managing your credit accounts effectively over several years.
• Using a variety of credit types such as credit cards, loans and mortgages.
• Applying for credit sparingly.

What makes your credit score go down?

• Paying your bills late or missing payments altogether.
• Using more than 30% of your available credit limits.
• Having a short credit history.
• Not having a mix of different credit types.
• Making too many credit applications.
• Defaulted or closed accounts.
• Debts sent to collection agencies.
• Making payments through a consumer proposal or bankruptcy.
• Errors on your credit report.
• Too many lenders.

Check your credit report regularly and learn how to read a credit report to understand the impact of each of these.

How to improve your credit score

If your credit score is low, there are steps you can take to improve it:

Make payments on time

Making payments on time accounts for 35% of your credit score. Pay your bills before the due date to show lenders that you can manage credit responsibly. Late or missed payments harm your credit score and negatively impact your chances of being approved for credit.

Keep your credit utilization low

Using too much available credit has a massive impact on your credit score. Your credit utilization ratio (or debt-to-credit ratio) is the percentage of used credit from the total available credit limit.

Aim to use less than 30% of your available credit. For example, if you have a $1000 credit card, you should keep your credit utilization ratio below $300.

Use a mix of credit

A credit mix involves having various credit products to show you can manage different types of credit over time.

When you have different types of credit, it can increase your credit score. For example, managing a loan, credit card, and mortgage can boost your score, but don’t open an account you don’t need or can’t afford.

Don’t make too many credit applications

Avoid applying for too much credit too quickly, as hard inquiries on your credit report lower your credit score.

Use a secured credit card

If you have difficulty being approved for a credit card, consider using a secured credit card.

You put down a deposit that acts as your credit limit, but payments and card use are reported to the credit bureaus. If you’re new to credit building, a secured credit card is a perfect place to start.

What is a good credit score for my age?

A credit score of 650 or higher is generally considered good for any age. According to the Equifax Canada Generational Study, the average credit scores by age group are as follows:

Age	Average credit score
18-25	692
26-35	697
36-45	710
46-55	718
56-65	737
65+	750

The study results suggest that credit scores increase with age as we make responsible decisions, such as taking out a mortgage, buying a car, using a mix of credit and making payments on time.

When you have assets like a house or car, there’s more to lose, which may explain why credit scores are stronger with age.

Credit score FAQs

Why do I need a good credit score?

Your credit score affects whether you qualify for a loan or a credit card, your ability to buy or rent a home, or whether you are accepted for your dream job.

What is the average credit score in Canada?

According to the 2019 Canadian Financial Capability Survey, the average Canadian credit score is between 650 and 725.

What is the highest credit score possible?

If you live in Canada, a score of 900 is the highest credit score you can achieve. Although credit scoring models for Equifax and TransUnion differ slightly, that’s the maximum score available.

What is a fair credit score?

Using Equifax’s scoring as a guide, credit scores below 660 make it harder to qualify for the best products and rates. Lower scores can result in you being refused credit.

What is a poor credit score?

If you have a credit score below 560, you will likely have difficulty getting credit or find it harder to qualify for favourable terms.

What credit score is needed for a loan?

In Canada, you need a credit score of at least 650 to get a personal loan with a traditional lender like a bank or financial institution. Anything lower will probably result in being refused. At best, you will be accepted with a higher interest rate.

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