What Is a Good Credit Score in Canada?

A credit score is a numerical representation of an individual’s credit risk and is used by banks and other lenders to assess the creditworthiness of borrowers. The higher your score, the better. In this guide, we’ll examine the factors that influence credit scores, discuss average credit scores in Canada, and find out what constitutes a good score. 

What Is a Credit Score?

A credit score is a three-digit figure which provides insight into your credit history and how effectively you manage money. If you’re borrowing money, it’s paramount to have a good credit score. 

In other words, when applying for a loan or a credit card, the bank is far more likely to approve your application if you have a high credit score. You may also be able to access preferential rates and deals with the right score. 

In Canada, the two main credit bureaus are TransUnion and Equifax. These companies collect and share information about your financial activities and how you use your credit. The bureaus rely on a range of factors to calculate your credit score in Canada, including the balance on your credit cards, how often you miss payments, existing debts, and credit applications. 

What Is Included in a Credit Report?

A credit report includes your personal details and offers an overview of your credit history. It’s created when you apply for a loan for the first time. The lenders you borrow money from will provide credit bureaus with the relevant information. The data contained within your credit report is used to calculate your credit score. Your credit score will change in line with updates to your credit report. It can go up or down depending on how you use credit. 

In addition to information about your accounts, such as when you applied for a credit card or loan, how much you owe, and whether you have missed any payment deadlines, your credit report may also contain the following information:

• Accounts that have been closed due to misuse, fraud, or debt
• Bankruptcy
• Insufficient funds payments or checks that have bounced
• The type of credit you use
• Debts paid to collection companies
• Inquiries made by lenders
• Identity alerts

What Is a Good Credit Score in Canada?

So how do you know if you have a good credit score in Canada? If you don’t know your credit score, you can find out by requesting a free credit report from both TransUnion and Equifax, which is available to all Canadian consumers. 

A typical credit score ranges between 300 and 900. The closer you are to the top of the scale, the better. In most cases, credit scores in Canada are categorized as follows:

• 560 and below: Poor
• 561-659: Fair
• 660-724: Good
• 725-759: Very good
• 760 and above: Excellent

The highest credit score in Canada is 900. This level of perfection is rare, but recent statistics show that more than 60% of Canadians have an excellent credit score. A further 21% have a very good credit score, and just 3% of Canadians have a score below 520. 

What Is the Average Credit Score in Canada?

Data from TransUnion shows that the average credit score in Canada was hovering around 650 in 2024, which most creditors consider average. Figures show that age can play a role in credit score, with the highest scores usually belonging to older age groups. The highest number of excellent scores in Canada belongs to those above 65. The highest number of scores below 560 is attributed to those under 25. 

According to Equifax, the average credit rating by age in Canada is as follows:

• 18-25: 692
• 26-35: 697
• 36-45: 710
• 46-55: 718
• 56-65: 737
• Over 65: 750

Location can also impact the credit score. In some areas, the proportion of people with good scores is higher than in other parts of the country. Quebec is home to the highest percentage of people with a credit score of over 750. Nunavut has the highest rate of adults with a score of less than 520. 

What Factors Affect Credit Scores?

So how is credit score calculated? We’ve already touched on some of the many factors that credit bureaus use to determine an individual’s credit score. Below we’ll delve deeper into the most important ones:

• Payment history

Your payment history is the most important contributing factor. This covers payments you have made in the past and represents a record of existing and previous debts. If you have used credit in the past and paid it back on time with no penalties or fees, your credit score should be good. Payment history accounts for 30% of the credit score. If you have borrowed money and you’ve missed payments, or you have outstanding debts, your credit score may be lower than average. 

• Credit utilization

Credit utilization is another driving factor and accounts for 30% of your credit score. This is a calculation which relates to how much available credit you use. Ideally, you want the ratio to be as low as possible to boost your credit score. If you have credit cards, for example, and your cards are all close to their limit, your credit utilization ratio will be high. If you don’t use your cards too often, your credit utilization ratio will be low. Experts recommend trying to keep your credit utilization ratio below 30%-35%. 

• Credit history

Credit history provides information about how long you’ve had credit and is one of the main reasons why older people tend to have better credit scores. This accounts for 15% of your credit score. If you have a long credit history and have always paid bills on time, your credit history will help boost your score. 

• Credit inquiries

Credit inquiries can affect your score, particularly if you are looking to borrow money frequently. When you apply for a loan, mortgage, or credit card, this will be recorded on your report. If you request new credit on a regular basis, this could be a red flag for lenders. It is important to note that only hard inquiries affect your credit score. A soft inquiry, on the other hand, is a preliminary review of your history and won’t affect your score. 

• Public records

Equifax is especially interested in public records, which may contain information about any previous bankruptcies. Debts that have been referred to collection agencies are also included in your credit reports. 

Why Does a Credit Score Matter?

Understanding how credit scores work is an important part of managing finances and borrowing money. If you want to take out a loan or apply for a credit card, for example, a lender will check your credit score to help them decide whether or not to approve your application. Applicants with high credit scores are almost immediately approved. There is also a better chance of being able to access preferential rates for credit cards, loans, and other financial products. 

The credit score range in Canada runs from 300 to 900. If your score is in the lower range, don’t panic. There are ways to boost your score to make borrowing money easier in the future. 

It is important to remember that there are products that are geared toward people who don’t have the highest credit scores. If you have a poor score, for example, you can look for lenders that offer the best low credit score credit cards in Canada. It is worth noting that interest rates are likely to be higher for these sort of products. 

Credit Score Improvement Tips

A good, very good or excellent credit score can boost your chances of securing a loan and better terms. That’s why it’s highly beneficial to try and improve your credit score. Here are some useful credit score improvement tips:

• Keep a close eye on your payment history

Your payment history is the most important element of your credit score. Try to ensure that you pay off debts on time and make payment deadlines or contact the lender as soon as possible if you think you may not be able to cover a repayment. If you can’t afford to cover your credit card balance on time, be sure to make the minimum payment to remain in good standing. 

• Keep your credit utilization ratio as low as possible

It may be tempting to use all your credit, but if you don’t need it, don’t use it. If you have a credit card with a maximum balance of $10,000, for example, try to keep the balance below $3,500. This will keep your credit utilization ratio low, which is better for your credit score. If you use all the credit available, your score will decrease. 

• Build your credit history

Your credit history tells the lender what kind of borrower you are. If you have a long credit history and have paid off cards or loans before, this signals a lower level of risk for lenders. If you want to improve your credit score, it’s wise to try to build your credit history. Try to avoid applying for new credit all the time, such as new credit cards that allow for a balance transfer from a high-interest card to a low-interest one. If you do choose to transfer your balance to take advantage of lower interest rates, keep the old account open, as this will help to preserve your credit history. 

• Seek advice if you’re struggling

If you’re worried about paying bills or making deadlines, it’s wise to seek advice from someone with expertise. This can help you avoid falling behind on payments and incurring penalties. 

• Limit the number of credit inquiries

When you apply for a credit card or a loan, this will be logged as a hard inquiry. If you have a large number of inquiries on your record, this can be a red flag for lenders.

How Often Are Credit Scores Updated?

Your credit score changes when your credit report is updated. Lenders usually provide new information to credit bureaus every 30-45 days. If there is new information on your report, your credit score will be updated. 

How to Check A Credit Score In Canada

If you live in Canada and don’t know your credit score, you can order a free copy of your credit report from either TransUnion or Equifax.