Credit scores can feel mysterious, but they're built on a fairly straightforward set of factors. Whether you're years away from your next mortgage or simply want to keep your finances in good shape, understanding how your score works is genuinely useful knowledge.
Note: This article is for general educational purposes only and is not individualized financial or legal advice. For guidance specific to your situation, please speak with a qualified mortgage professional or financial adviser.
What Is a Credit Score?
In Canada, credit scores range from 300 to 900. The two main credit bureaus are Equifax and TransUnion, and lenders use your score — along with other factors — to assess how reliably you've managed borrowed money. A score above 720 is generally considered strong; above 760 is excellent.
What Makes Up Your Score?
- Payment history (roughly 35%): Paying bills on time is the single biggest factor. Even one missed payment can have a noticeable impact.
- Credit utilisation (roughly 30%): This is how much of your available credit you're actually using. Keeping balances well below your credit limits — ideally under 30% — helps your score.
- Length of credit history (roughly 15%): Older accounts, kept in good standing, work in your favour over time.
- Types of credit (roughly 10%): A mix of credit cards, instalment loans, and lines of credit can be beneficial.
- New credit inquiries (roughly 10%): Applying for several new credit products in a short period can temporarily lower your score.
How to Check Your Score in Canada
Both Equifax and TransUnion allow Canadians to request a free credit report. Several banks and apps also offer free credit score monitoring — it's worth checking yours at least once a year. Reviewing your report also lets you catch errors, which are more common than people expect.
Simple Habits That Help
- Set up automatic minimum payments so you never accidentally miss a due date.
- Avoid closing old credit card accounts if you're not carrying a balance — length of history matters.
- If you're planning a major purchase that involves financing, try to avoid applying for new credit in the months beforehand.
Your credit score isn't a fixed number — it responds to your habits over time. Small, consistent choices have a compounding effect, and that's actually encouraging news.