Financial well-being is one of the most sought-after goals. People want to feel secure about their financial future and have control over their money. A good credit score is key to achieving this goal.
A good credit score in Canada is at least 660 on a scale of 300 to 900. While this score will get you a loan on good terms, the ideal score ranges from 725 to 900, which is a very good to excellent rating. This number helps financial institutions to make lending decisions. It is also a requirement for some rental properties and even job applications.
Key Takeaways
Good scores in Canada start at 660 on a scale of 300 to 900; scores above 725 are considered very good, and scores above 760 are excellent.
Your score is calculated by the two main credit bureaus based on factors like payment history, credit utilization, length of credit history, and types of credit used.
Payment history and borrowing capacity utilization have the largest impact on the calculations.
You can check your score for free once a year from both credit bureaus by mail, phone, or online for a small fee.
A good credit score helps you qualify for better interest rates and higher limits on loans. It may even affect rental approvals.
Improving your credit score requires consistent good financial habits like paying bills on time, keeping credit utilization below 30%, and applying for new credit sparingly.
What is a Credit Score?
A credit score is a three-digit number that shows how well you manage money and repay loans. Financial institutions call this creditworthiness, and in Canada, the score can be anywhere between 300 and 900. Lower scores signal that you’re a high-risk borrower.
Simply put, it is a numeric representation of whether or not you are responsible when it comes to money management. A credit reporting agency, such as TransUnion or Equifax, assesses things like your debt levels and payment habits to determine your score.
How is My Credit Score Calculated?
Your score isn’t just a random number. Reporting agencies evaluate specific aspects of your financial behavior, including your credit history. Equifax and TransUnion, Canada’s two primary credit bureaus, use slightly different credit scoring models (see the table below).
Factor | Equifax | TransUnion |
Payment History | 35% | 40% |
Utilization | 30% | 20% |
Credit History Length | 15% | 21% (includes account mix) |
Public Records | 10% | Not specified |
Inquiries | 10% | ~5% |
Your payment history weighs the heaviest on your final score for both bureaus. However, TransUnion places more emphasis on this factor. Both bureaus look at things like missed and on-time payments.
The bureaus also evaluate what portion of the available credit you are using. TransUnion breaks this factor down further into usage (20%), total balances (11%), and available balance (3%). Both bureaus recommend keeping utilization below 30%.
How deep your credit history runs is the third most significant consideration. A longer credit history shows potential lenders how you’ve managed accounts over time. TransUnion combines this with account mix (variety of loan types), while Equifax separates these factors.
Other elements, such as public records (bankruptcies, collection accounts) and recent loan applications, also impact your credit score. However, they carry less weight than the other factors.
How Do You Know You Have a Good Credit Score in Canada?
In Canada, as in many other countries, much of the economy runs on credit. Even moving to a different residence may require presenting a credit report. The higher the rating, the better your chances of getting approved to rent. So, what is a good credit score?
In Canada, it generally starts at 660, according to Equifax. If your score lies anywhere between 660 and 724, most lenders will view you as a low-risk borrower who likely manages debt responsibly. This level of creditworthiness typically qualifies you for standard loan products and credit cards with reasonable interest rates.
But how do you know if your score is good? The simplest way is to inquire through any of Canada's credit bureaus and compare it to standard benchmarks. Many Canadian credit unions, banks, and other financial institutions also offer free monitoring services to their members or customers.
Keep in mind that lenders don't use the same criteria when evaluating creditworthiness. Some may consider a score of 650 perfectly acceptable, while others might look for 680 or higher for their best offers.
Ranges of Credit Scores in Canada
Credit score ranges in Canada are not the same for each reporting agency, but they’re pretty close. Equifax provides the following scale:
Excellent (800-850): Low-risk borrowers with access to the best rates.
Very Good (740-799): Positive credit history with easier approvals.
Good (670-739): Considered acceptable, lower-risk borrowers.
Fair (580-669): "Subprime" borrowers facing higher interest rates.
Poor (300-579): Difficulty obtaining new credit.
TransUnion’s scale is a bit different:
Excellent (781-850): Premium products, lowest rates.
Good (661-780): Standard products with reasonable terms.
Fair (601-660): Higher rates, stricter requirements.
Poor (300-600): Limited options.
How to Check Your Credit Score
A good credit score stays that way if you keep it healthy, and part of doing that is checking it regularly. The good news is that Equifax and TransUnion grant one free request per year. Contact them by phone or mail to receive your report.
If that doesn’t work for you, the bureaus offer online options at a fee. Alternatively, you may choose to go through your bank, credit union, or credit card issuer. Some of them have tools for monitoring your creditworthiness for free.
How Does Your Credit Score Compare to the Canadian Average?
Knowing where you stand compared to other Canadians provides a helpful context for your financial journey. According to the Fair Isaac Corporation (FICO), the average credit score in Canada is 760. However, there may be slight differences in the scores provided by each bureau due to variations in the data they use. These discrepancies are usually small — just a few points.
Different scoring methods will yield different results, but in general, a healthy credit rating is a score around 660.
Benefits of a Good Credit Score
Financial institutions use credit scores to gauge the level of risk associated with lending you money. To understand the importance of a credit score, a “good” rating will qualify you for lower loan rates. This can save you thousands of dollars over the loan’s lifetime.
For example, on a $30,000 car loan, someone with an excellent credit score might receive an interest rate 3-4% lower than someone with a poor score. (The credit score for a car loan differs across lenders.) This difference could save you over $2,500 in interest payments over a 5-year term. Simply put, good scores help:
Qualify for higher credit limits
Negotiate better terms with lenders
Secure rental housing more easily (many landlords conduct credit checks)
Avoid security deposits on utilities
Qualify for better insurance rates (in some cases)
Get loans easily because lenders approve your application faster
Factors That Influence Your Credit Score
We learned earlier that your credit score may vary depending on who calculates it. The figure you might get from Equifax may not be the same as the one from TransUnion, but the disparity is often quite small. Although the bureaus use different scoring methods, their overall approach is quite similar.
Generally, the calculation considers specific aspects of your finances and assigns weights. These aspects provide information that credit bureaus can manipulate into an easy-to-understand number.
That means you need to know what these factors are to actively influence your rank. The Financial Consumer Agency of Canada (FCAC) identifies several key factors, including:
Credit history length: How long you've had credit accounts matters. Longer credit histories provide more data about your reliability.
Account history: The length of time each credit account has been in your report contributes to your overall rating. That’s why it is advisable to retain old accounts for longer.
Credit card balances: If you don’t pay the full amount owed each month, your credit utilization ratio may increase, signaling higher risk to lenders.
Payment consistency: Some scoring methods, such as Equifax’s, place a huge weight on payment history (35%). So, late or missed payments could dent your rating substantially.
Outstanding debt: A high amount of outstanding debt increases the credit utilization ratio. Even if you pay on time, the high ratio scares creditors away because it signals financial strain.
Credit limit usage: This is another factor that impacts the credit utilization ratio. Being close to, at, or above your credit limits is a sign of potential overspending.
Credit applications: The number of recent loan requests can influence lenders' perception of your financial stability.
Credit variety: The loan type you're using reveals your ability to manage different obligations.
Collection actions: Your rating could be irreparably damaged if a collection agency takes up your obligations.
Bankruptcy or insolvency: Any record of bankruptcy or insolvency can slice up to 200 points from your score. Lenders view this as an extreme financial risk and may reject credit applications.
Conclusion
Your score determines if financial institutions will lend to you, and if yes, what will be the cost of the debt. A good score is anything above 660, although it may vary.
This rating isn’t fixed. That means a good score today can become excellent or degrade to the “poor” territory in the future. Your financial conduct will determine in which direction the rating goes.
To improve your credit score, you have to pay bills on time, maintain a low credit utilization ratio, keep a healthy credit mix, and apply for new credit sparingly.
It also helps to conduct regular credit checks. First of all, they’re a good way to make sure you haven’t been the victim of fraud.
Regular checks can also help you track your progress and spot potential issues early. If your credit report shows that the score isn’t where you want it to be, you can actively move the needle to better categories.
Still have questions about your credit score? Contact us for personalized advice to improve your financial health.
Frequently Asked Questions
How can I check my credit score?
You can get a free credit report once a year from any of the country’s credit bureaus by mail or phone. The bureaus also offer online options for a small fee. Many Canadian financial institutions also offer free monitoring to their customers or members.
Can I improve my credit score?
Yes. You just need to pay all bills on time, keep credit utilization below 30%, avoid too many credit applications, keep older accounts for longer, and request your credit report regularly. Improving this score takes time, but consistently good financial habits will gradually raise it.
Can I get a loan with a bad credit score?
Yes, but with limitations. Lenders typically charge higher interest rates or require larger down payments if your score is below 660. Consider secured credit products, finding a co-signer, or exploring lenders who specialize in poor credit situations to rebuild your score.