How Does Gambling Affect Your Credit Score in Canada?

Maintaining a healthy credit score is vital for your financial wellbeing in Canada. It affects your ability to secure credit products like credit cards and loans, get the best interest rates, and even get a job. While gambling itself does not directly affect your credit score, the consequences of gambling and how you choose to fund your gambling activities can have a big impact. Let’s take a look.

Gambling and Your Credit Score

The two main credit bureaus in Canada, Equifax and TransUnion, do not include information about gambling activities (whether in-person gambling, online gambling or gambling apps) on your credit report, and betting companies do not report information about you to the credit bureaus. The credit bureaus focus on credit-related activities, such as your history of making your credit payments on time, what type of credit products you hold, and how much of your credit you’re currently using.

However, if you find yourself using credit to fund your gambling, that’s when gambling can start to have a significant impact on your credit score. 

Your credit score is calculated through five different factors, and gambling can have an indirect effect on three of them:

Payment History

You can think of your payment history like your track record of making your credit payments on time. It’s the single largest factor that determines your credit score, so it’s really important that you keep up with your credit card, loan and mortgage payments, even if you can only make the minimum payment. 

If you borrow money for gambling and and don’t make on-time payments, that’s when gambling can start to have a significant negative impact on your credit score. Even one missed or late payment can hang around on your credit report for up to six years.

Credit Utilization

Your credit utilization is the amount of credit you’re using as a proportion of the total credit you have available to you in your name. At Borrowell, we recommend that you keep your credit utilization rate below 30%, as going over that percentage can hurt your credit score.

This means that, if you had two credit cards with credit limits of $5,000 each, so you had $10,000 available to you in total, we would recommend keeping your balances across both cards below $3,000 (30% of $10,000).

If you start using credit to fund your gambling, you run the risk of increasing your credit utilization above the recommended 30% threshold, especially if you’re not able to pay back your balances quickly. As credit utilization is the second biggest factor that determines your credit score, this could have a damaging effect on score.

Credit Inquiries

Every time you make an application for a new source of credit, such as a credit card or personal loan, the financial institution you apply to will run a credit check, also known as a “hard inquiry”. Every hard inquiry made on your credit report will have a small negative impact on your credit score, especially if you make multiple applications for credit within a short space of time, as this can signal to lenders that you’re desperate for credit.

If you use credit to fund your gambling activities, and you start applying for new credit lines as a result, you will likely see a negative impact on your credit score.

Gambling and Bankruptcy

If using credit to fund your gambling leaves you with an unmanageable amount of debt, you may end up facing the possibility of having to declare bankruptcy. 

Filing for bankruptcy can have a massive impact on your credit rating and could cause your credit score to drop a minimum of 200 points overnight. Even if you previously had good credit, your credit score will likely take a dramatic nosedive if you end up having to pursue bankruptcy.

How to Gamble Without Damaging Your Credit Score

The most essential thing you can do to ensure gambling doesn’t affect your credit score is to ensure that you don’t use credit to fund your gambling activities. If you do use credit to pay for gambling, it’s essential to ensure that you’re only spending what you can comfortably afford to pay back. Spending above your means with credit is never a good idea and can quickly lead to a severely damaged credit score if you’re not careful.

If you’re concerned that you or a loved one may have developed a gambling addiction, there is help available. The Canada Safety Council has a list of helplines by province on their website.

How to Repair Your Credit Score

If you’ve damaged your credit score through the effects of gambling, there are things you can do to rebuild. You may not see results instantly, but with patience and some hard work, you should start to see improvements after a few months. The most important thing you can do is ensure that you make all of your credit card, loan and mortgage repayments on time every month.

Let’s explore some of the best ways to repair your credit score:

Create and Stick To a Budget

Healthy financial habits are key to a good credit score. This includes spending within your means, setting (and sticking to) a budget, and paying your bills on time.

It’s a good idea to work out your total income and total monthly outgoings (including debt repayments), and then calculate what you have left over. You can then set a spending plan to make sure you don’t use more than that leftover amount before your next payday.

Debt Consolidation

If you’re struggling to keep up with repayments across multiple credit cards, lines of credit and payday loans, it might be worth considering consolidating your debt. As mentioned previously, payment history is the biggest factor that determines your credit score, so it’s vital that you find a way to make your payments more manageable.

Debt consolidation is when you get a new loan to pay off a number of smaller, high-interest sources of debt. This means that, instead of making payments to lots of different credit cards and loans, you only need to make one monthly payment, making it a lot easier to keep on top of your debt.

However, you should only pursue this route if you feel able to trust yourself not to use the credit cards you pay off with the debt consolidation loan for gambling again. This would only compound your problem, send you further into debt, and further hurt your credit score.

A Credit Builder Program

A credit builder program can be a valuable tool to help you establish or repair your credit score with little effort. You start out making monthly payments that are reported on your credit report, helping you to rebuild a positive payment history. Then at the end of the program, you receive a lump sum back from the payments you’ve made.

With Borrowell Credit Builder, users see an average credit score increase of 41 points within the first five months of using the program¹.

The Bottom Line

While gambling itself does not directly impact your credit score, the financial consequences associated with borrowing money for gambling can have a hugely detrimental effect on your score. Accumulating debt for gambling that you can’t afford to repay will likely cause damage that can take years to repair. For this reason, if you must participate in gambling, it’s crucial to stay away from using credit to pay for your betting activities.