Your credit score is one of those numbers that carries a lot of weight but rarely comes with a clear explanation. Whether you're years away from your next mortgage or simply want to feel more financially grounded, understanding the basics puts you in a stronger position.
What Is a Credit Score?
In Canada, your credit score is a three-digit number, typically ranging from 300 to 900. It's calculated by the two main credit bureaus — Equifax and TransUnion — based on your borrowing and repayment history. Lenders use it to assess how likely you are to repay a debt. Generally speaking, scores above 660 are considered good, and scores above 725 are considered very good.
What Goes Into the Number?
While the exact formulas are proprietary, credit scores are broadly influenced by these factors:
- Payment history (the biggest factor): Do you pay your bills on time? Even one missed payment can have a noticeable impact.
- Credit utilisation: How much of your available credit are you using? Keeping balances below 30% of your limit is generally recommended.
- Length of credit history: Older accounts in good standing work in your favour.
- Credit mix: Having a variety of credit types (credit card, car loan, line of credit) can help.
- New credit inquiries: Applying for several new credit products in a short period can temporarily lower your score.
How to Check Your Score
Both Equifax and TransUnion offer free credit reports in Canada. Several banking apps and services like Borrowell or Credit Karma also provide free score monitoring. Checking your own score is considered a soft inquiry and does not affect it — so there's no reason not to look.
Simple Habits That Help Over Time
- Set up automatic minimum payments so you never accidentally miss a due date.
- Avoid closing old credit cards you're not using — the available limit and history can help your score.
- If you find errors on your credit report, both bureaus have a dispute process to correct them.
Credit scores aren't fixed — they respond to your habits over time. Small, consistent actions tend to move the number in the right direction. If you're planning a mortgage renewal or refinance in the coming year or two, it's worth giving your score a look now so you have time to address anything unexpected.
Note: This is general information only. For advice specific to your situation, speak with a licensed mortgage professional or financial adviser.