Credit Scores Explained

What Is a Credit Score?

A credit score is a three-digit number that represents your creditworthiness, or how likely you are to repay borrowed money. In Canada, credit scores typically range from 300 to 900. The higher your score, the better your credit profile looks to lenders.

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Your score is calculated based on the information in your credit report, which includes how you manage credit cards, loans, and other financial obligations.

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Why Your Credit Score Matters

Your credit score can affect:

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• Whether you’re approved for a loan, mortgage, or credit card

• The interest rate you’re offered (higher scores = better rates)

• Your ability to rent an apartment or even get a job (some employers check credit)

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In short: a strong credit score can save you money and open more financial doors.

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How Credit Scores Are Calculated (Canada)

While exact scoring formulas are proprietary, most scores use similar criteria:

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Payment history - 35%

Credit utilization (how much you owe vs. your limit) - 30%

Length of credit history - 15%

Credit mix (types of credit) - 10%

New credit inquiries - 10%

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How to Improve Your Credit Score

• Pay on time – Late payments hurt your score the most.

• Keep balances low – Try to use less than 30% of your credit limits.

• Avoid unnecessary credit applications – Too many “hard checks” can lower your score.

• Keep old accounts open – Longer histories help your score.

• Check your credit report – Look for errors and report them.

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Key Takeaways

• Credit scores range from 300–900 in Canada; 660+ is generally considered good.

• Payment history and credit utilization are the biggest factors.

• A good credit score gives you better access to financial products and lower interest rates.

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Common Questions

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Q: What’s a good credit score in Canada?

A: 660 or higher is considered “good.” Scores above 760 are “excellent.”

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Q: Do student loans or phone bills affect my credit score?

A: Yes. If they’re reported to credit bureaus and paid late, they can negatively impact your score.

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Q: How often should I check my credit score?

A: At least once a year—or more often if you’re planning a big purchase like a home.

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