Credit Score Range Canada

Credit Score Ranges in Canada (Guide)

What is the credit score range in Canada? When it comes to your credit score, there can often be misconceptions and confusion surrounding the topic.

In Canada, your credit score is a number that ranges from 300-900. The higher the number, the better.

This number reflects your creditworthiness to potential lenders, who use your credit score to estimate the likelihood that you will make your payments on time.

The two credit reporting agencies in Canada are Equifax and TransUnion. Each agency uses a slightly different approach to calculate your credit score. However, your reported credit scores should fall within a similar credit score range.

The Credit Score Ranges in Canada

Credit Score Ranges in CanadaThere are five different credit score ranges in Canada that your credit score can be classified under. Depending on where your credit score lands, you can have anywhere from very poor to excellent credit.

It’s important to know which credit score range you are in, as each range affects your financial situation differently. A good credit score helps you qualify for the best available interest rates when it comes to personal loans, lines of credit, and mortgages.

Classification Credit Score Range
Excellent 760-900
Good 725-759
Fair 660-724
Poor 560-659
Very Poor 300-559

Excellent Credit Score (760-900)

If you have a credit score above 760, then you are in the top credit score range in Canada! Give yourself a pat on the back – this is the ideal range that you want your credit score to be in.

As long as your score is within this range, it doesn’t matter too much where exactly your score lies. You will typically qualify for the best available rates on personal loans, mortgages, and lines of credit. There will be little to no trouble getting approved for credit products.

Good Credit Score (725-759)

Coming in just a step below is the good credit score range in Canada. If your credit score is in this range, then you are faring quite well and have a credit score that is higher than average.

A score in this range typically means that you will receive interest rates that are only slightly lower than the best available rates, but still relatively solid. Getting your credit applications approved generally won’t be an issue.

Fair Credit Score (660-724)

The average credit score of ~660 falls within this credit score range in Canada. This is considered an acceptable credit score range to be in, but there can be room for improvement if you’re looking to land better interest rates.

With a score in this range, you should get approved when you apply for credit products, but you might have to pay a higher interest rate to compensate for the increased risk perceived by lenders.

Poor Credit Score (560-659)

Anything below a fair credit score is considered poor. You may find difficulty in getting approved for certain credit products at this credit score range in Canada. You will also likely pay relatively high interest rates to hedge against the increased risk of default.

If your score is in this range, don’t worry – there are effective ways to improve your credit score quickly. Once you understand how credit scores are calculated, you can improve your credit score by following key credit building strategies.

Very Poor Credit Score (300-559)

Similar to the poor credit score, a score below 560 lands within the lowest credit score range in Canada. Most credit applications will likely be rejected, or will need to be secured credit products (such as a home equity line of credit or secured credit card). If you do manage to get approved for a credit product, the interest rates will be unfavourably high and should be paid off as soon as possible or avoided altogether.

Due to the constraints of having a poor credit score, having a credit score in this range can have noticeable effects on daily life and long-term financial health. Emphasis should be placed on improving your credit score and consolidating outstanding debt to lower interest rates where possible.

How Can I Check My Credit Score?

There are a few ways you can check your credit score. In fact, you can do it right now if you have a few minutes to spare.

Checking your credit score is free, can be done online, and does not impact your credit score. This is because checking your credit score is considered to be a “soft” inquiry, which doesn’t affect your score or show up on your credit report.

In Canada, you can check your credit score using the following sites:

Borrowell

Borrowell lets you check your Equifax credit score for free. They also provide you with a weekly updated credit report that displays your active credit products. This includes additional visibility into your payment history. Borrowell also offers you the ability to print or download a PDF of your credit report.

Get Your Free Credit Score And Credit Report

Mogo

Mogo lets you check your Equifax credit score. It’s free and signing up takes 3 minutes to do. They also provide free identity fraud protection by monitoring suspicious hard inquiries on your credit report and notifying you whenever a potential threat is detected. They also offer various different credit products such as credit cards, mortgages, and even a Bitcoin program.

Get Your Free Credit Score And Fraud Monitoring

Credit Karma

Credit Karma lets you check your TransUnion credit score for free. They also provide you with a credit report that is updated weekly which shows the status of the all your credit products. Additionally, you can view your payment history and whether you made each payment on time.

Get Your Free Credit Score And Credit Report

How Your Credit Score Is Calculated

Everyone should know what makes up their credit score and how their credit score is calculated. By understanding what actions positively or negatively impact your credit score, you can avoid damaging your score inadvertently.

Your credit score is affected by five main factors. Each factor is weighted differently when calculating your credit score.

Credit Score Factors in Canada

  • Payment History (35%): The factor that influences your credit score the most is whether you make your payments and whether they are on time. One of the best was to improve your credit score is to consistently make your payments on time, every single time. An example of a favourable payment history is paying your credit card balance in full every single month.
  • Credit Utilization (30%): The second-most important aspect in your credit score is your credit utilization. Credit utilization is the percentage of how much money you have borrowed relative to the credit limit of the product. The lower your credit utilization, the better. Generally, try to keep the credit utilization in credit cards and lines of credit below 30%. For example, if your credit card limit is $10,000 and you are carrying a balance of $2,000, then you have a credit utilization of 20% on the credit card.
  • Length of Credit History (15%): The length of time that you have been using credit impacts your credit score. The longer that you’ve been using credit, the better. This is because a longer credit history generally indicates greater experience with managing credit. The best tip here is to keep your oldest credit product open, such as your first credit card. If you’re young, a great way to start building good credit is to open a credit card when you turn 18 or the age of majority in your province or territory.
  • Recent Credit Inquiries (10%): Each time you apply for a new credit product, lenders pull a “hard” check on your credit. Hard credit checks will cause a slight dent to your credit score, but it is usually temporary and resolves itself in a few weeks. However, if you apply for multiple new credit products in a short span of a few weeks or months, your credit score may decline for a longer period. This is because frequently applying for credit signals to lenders that you may suddenly be in need of debt, which increases their risk of lending. A general rule of thumb is to space your credit applications no less than 6 months apart, but can be as few as 3 months if you have good credit.
  • Variety of Credit Products (10%): Do you have a credit card, line of credit, and a mortgage? The greater variety of credit products that you have, the better. Having more types of credit indicates to lenders that you have experience with a wide array of credit products, which generally signifies a better understanding of using credit.

How Can I Improve My Credit Score Range?

Regardless of what your credit score range is, there are simple yet effective ways to improve your credit score. Spoiler alert: it has to do with the factors that affect your credit score as described above.

Here is the step-by-step process to increase your credit score, and you can start as quickly as today.

  1. Monitor Your Credit Score: A great way you can improve your credit score is to simply keep track of your score and which direction it is trending. Studies have shown that monitoring your credit score regularly has been found to correlate to an improvement in your score over time. You can do this easily by getting a free credit score check from Borrowell, Mogo, or Credit Karma.
  2. Pay Off Your Credit Cards in Full Every Month: This is the most direct and straightforward way to build your credit fast. You want to demonstrate creditworthiness by fully paying off your credit card in a timely and consistent manner. If there was one tip to take away from this list, it would be this one.
  3. Keep Your Credit Utilization Below 30%: Your credit score starts to be negatively affected if your outstanding balance exceeds 30% of the credit limit. This applies to each of the credit cards and lines of credit that you have. If you have a high credit card balance, work on reducing and ultimately eliminating your credit card debt. Not only will this benefit your credit score by lowering your credit utilization, but credit card interest is among the highest interest rates out there, short of payday loans. You want to avoid paying the 20-25% interest if at all possible.
  4. Avoid Maxing Out Your Credit Cards (Even Temporarily): Credit bureaus check your credit balances every so often. However, this may not coincide with when your monthly payments are due. As a result, try not to max out your credit card – but if you do, you should pay it off as soon as possible. Otherwise, the credit reporting agencies may see the balance and ding you for having high credit utilization, even if you’re making your payments in full and on time.
  5. Limit the Number of “Hard” Credit Inquiries Within a Short Timespan: If you’re planning to apply for multiple credit products, try to space out the applications to have the least amount of affect on your credit. As mentioned earlier, a general rule of thumb is to space your credit applications no less than 6 months apart, but can be as few as 3 months if you have good credit.
  6. Increase Your Credit Limit: One way you can improve your credit score is to increase your credit limit, which has the effect of lowering your credit utilization. This requires a hard inquiry on your credit report. However, as long as you aren’t obtaining several hard checks at once your credit score will rebound and the net improvement to your credit score will be positive.
  7. Only Buy What You Can Truly Afford: Do not use a credit card to spend above your means. This is a sure-fire way to place you in financial strain and you will have difficulties paying off your credit card balance, rack up tons of costly interest, and lower your credit score due to high credit utilization. Only ever use a credit card if you plan to pay it off in full every single payment period.

Improving A Low Credit Score Range And Consolidating Debt

If you have a credit score that is in the lower range, rest assured. You’ve already took the first step of educating yourself on the factors that affect your credit score.

If you have a high credit card balance, you need to find a way to consolidate your debt so that you are no longer paying the high credit card interest rates of 20-25%. Therefore, consider the following additional options that will help you fast-track your way to paying lower interest rates and improve your credit score range in Canada:

  • Credit Card Balance Transfer: You can use a balance transfer credit card to transfer your credit card balance to a card that has a no or low introductory interest rate. This gives you usually up to several months to reduce your balance or find another longer term solution.
  • Home Equity Line of Credit (HELOC): If you own a house, a great way to consolidate your debt is to apply for a home equity line of credit. This is essentially a line of credit that is secured to your home. HELOCs usually offer much lower interest rates and a high credit limit (generally up to 65% of the value of the home, depending on your mortgage). The downside is that if you default on your payments, the lender could foreclose on the house since you are putting it up as collateral to receive the loan.
  • Get a Low Interest Rate Credit Card: There are actually credit cards that are specifically designed to help you pay off your balance. They do this by offering a relatively low interest rate of 8-15%, which is respectably lower than the typical 20-25%. The only “catch” is that they don’t come with the rewards and perks that other credit cards typically offer.
  • Consolidate Your Debt with a Personal Line of Credit: If your credit score isn’t too low, then you can apply for a line of credit and then consolidate your debt by paying off your high interest credit cards with your line of credit. Personal lines of credit are generally unsecured and have better interest rates than credit cards.
  • Apply for a Debt Consolidation Loan: Another option you may have is to apply for a loan with a credit union or bank and pay off your credit card balances with that loan. The interest rate may still be relatively high depending on your credit score, but it will still be better than paying credit card interest.
  • Obtain a Secured Credit Card: If worst comes to worst and you can’t get approved for any of the other options, try applying for a secured credit card. Secured credit cards are backed by a cash security deposit that is typically equal to or higher than the credit limit of the card. The downside is that you need to pay a cash deposit, but as a result pretty much anybody can get approved for one. This is a great place to start if you’re starting from scratch and are solely looking to build your credit score.

Final Thoughts

No matter what your credit score is and which credit score range you’re in, you should always aim to improve your score and follow the essential credit score building strategies.

Regularly monitoring your credit score, paying off your credit card balance in full each and every month, and maintaining a low credit utilization are the best ways to place your credit score into the excellent credit score range.

Hopefully, you are now equipped the knowledge of credit score ranges in Canada and understand the different aspects that make up your credit score. Enjoy using credit responsibly!

 

 

 

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