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In Canada, a “good credit” score is one that falls around the 660 and 724 range. This indicates you’re a reliable borrower and qualifies you for desirable loan terms. In this article, we explore what impacts your credit with tips for boosting your credit score to unlock better financial opportunities.
Do you know your credit score?
Many Canadians don’t know about the credit scoring system – let alone their own credit score – until they apply for a car, business or home loan.
A lower credit score can make you look like a riskier option for lenders who are in the business of making money. That means you end up paying more to access the same loan products as others… or missing out entirely.
On top of the loans you get and the rates you pay, your credit score can affect your premiums for home or car insurance and even whether landlords will let you rent their apartments.
If you’d like to avoid paying more than your fair share, read on to learn how credit scores work in Canada, how to use your score to get better rates and deals, and how you can improve yours.
| 🇨🇦Overdraft Apps Tip: You may be able to save thousands of dollars a year on your mortgage, car loans and credit cards by just having a better credit score. |
How Credit Scores Work in Canada
Credit scores in Canada range from 300 to 900.
This score is used by lenders to determine how risky it might be to lend you money.
Outside of your bank, your credit score may be used by landlords, phone providers, employers and of other people and organizations who can charge you more money based on your three digital score!
Here’s a quick breakdown of credit score tiers according to Equifax:
- 300-559: Poor
- 560-659: Fair
- 660-724: Good
- 725-759: Very Good
- 760-900: Excellent
RECOMMENDED: Try These 5 Canadian Cash Advances For a Quick $50 🔥
What Factors Influence Your Credit Score?
Your credit score will be calculated based on a range of different factors relating to your financial situation.
This information can include what loans you have active and how much you need to repay, whether you’ve missed payments to your loan or credit card, and the total value of your loans.
Your credit score is a fluid number, so it can get better – or worse – over time.
According to provincial Canadian laws, credit bureaus may keep negative information on your credit report for only a certain period of time.
Most transactions will remain on your credit history for around two years, with issues like defaults staying on your credit file for at least five years. A serious credit infringement (such as repossession or bankruptcy) can stay on your record for six or seven years, depending on the province.
Here’s how your credit score is broken down.
- Payment History (35%): Timeliness of your bill payments.
- Credit Utilization (30%): The amount of credit you use versus your total credit limit.
- Credit History Length (15%): The duration of your credit accounts.
- Credit Mix (10%): Types of credit (e.g., credit cards, loans).
- New Credit Inquiries (10%): Frequency of credit applications.
What Counts as a “Good” Credit Score in Canada?
The answer to this question depends on who you ask.
Canada has two credit bureaus:
These agencies use scoring models from companies, like FICO and VantageScore, as well as their own proprietary scoring models, to calculate your credit score. Any score above 660 is typically considered a “good” credit score in Canada.
| RATING | EQUIFAX | TRANSUNION |
|---|---|---|
| Poor | 300 – 559 | 300 – 692 |
| Fair | 560 – 659 | 693 – 742 |
| Good | 660 – 724 | 743 – 789 |
| Very Good | 725 – 759 | 790 – 832 |
| Excellent | 760 and up | 833 and up |
| 🇨🇦Overdraft Apps Tip: Equifax and TransUnion have slightly different credit score ranges because they incorporate their own scoring algorithms on top of FICO or VantageScore models. |
Tips to Boost Your Credit Score
✓ Pay your entire outstanding amounts, on time. Late payments can significantly harm your score, so try to pay your bills or credit card payments on time.
✓ Use <30% of your total available credit. For example, if you have a $10,000 limit, try not to exceed $3,000.
✓ Maintain a mix of credit products. For example, a credit card and a $150 line of credit through an app like Nyble.
✓ Avoid closing old accounts (even if you don’t use them). The “average age of accounts” is a credit score factor so keeping the accounts open can help maintain the length of your credit history.
Credit Building Spotlight: KOHO Credit Builder Account
KOHO is a mobile banking app that’s helping over one million Canadians budget, spend, and improve their credit scores.
The KOHO app can give you a suite of powerful banking features right from your phone. If you’re looking to raise your credit score, KOHO offers three ways to build your credit:
- Secured Credit Building: Deposit your own money as a line of credit and repay it on time to build your credit history.
- Credit Building: Take out a line of credit and repay it on time to build your credit history.
- Supercharge your credit by using both options
According to KOHO’s website, whichever credit building option you choose, there’s no interest, no applications, and guaranteed approval!
Once you’ve registered for a KOHO credit building product in-app, you’ll be able to see your current credit score. You’ll also be able to see your updated credit score each month after successful payments.
| 🇨🇦Overdraft Apps Tip: KOHO users see an average credit score increase of 22 points after just 3 months of using Credit Building.2 |
Start improving your credit score today >>> Check out KOHO 👈
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Cash advance apps can be a great tool for getting a little extra cash when you need it, but you’ll need to repay it – plus fees – wihtin a week or two. Did you know there’s an easy way to earn extra cash that’s yours to keep?
KashKick is a wildly popular service that lets you earn money for playing games, completing surveys, signing up for trial offers and more. (You’ll even earn cash for just completing your profile!) You can earn cash today and withdraw your earnings through PayPal once you’ve reached $10. You can earn over $100/month with KashKick – and you don’t need to spend a dime or take out your credit card to do it.
There are dozens of high-paying offers available on KashKick, and if you’re into playing new games on your phone, you can earn some serious cash for doing what you love. Though offers change regularly, there are currently1 more than three dozen offers available where you can earn cash – sometimes over $100 – just by downloading and playing popular games like Coin Master, Monoply Go, Bingo Blitz, and more. These games are all free to download, and no in-app purchases are required to earn with KashKick.
Get paid to play on your phone >>> Check out KashKick
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- As of February 13, 2024. Offers may change and may not be available to all users. Eligibity requirements apply. See KashKick's Terms of Service for full details.
- Credit scores are based on complex models involving a variety of factors. Consistent on-time payments help improve credit scores. Missed or late payments may cause credit scores to decrease. Outcomes may vary among users.
