A 600 credit score is below average in Canada. It’s not the lowest score possible, but it’s definitely worth improving. With a 600 credit score, you may have trouble getting approved for certain loans and credit cards. You also won’t qualify for the lowest interest rates possible, which can cost you money in the long-run.
Credit scores in Canada range from 300 and 900; the higher your credit score, the higher your chances of qualifying for financial products. There are five distinct categories that credit scores fall into, ranging from poor to excellent.
660 is the average credit score in Canada, which means if you have a 600 credit score, you’re below the pack. A 600 credit score will limit what financial products you qualify for. When you apply for products, lenders look at your credit score to determine your risk level. If you do get approved, you may find that the interest rates are higher or the terms aren’t as competitive.
A 600 credit score can also impact other major areas of your life. Below average credit could prevent you from buying your first car, renting your first apartment, landing your dream job, or buying your first home. Want to reach one of these milestones? If you do, it’s in your best interest to improve your credit score from below average to good.
Learn more below on what products you qualify for with a 600 credit score, why your credit score may be below average, how your credit score is calculated, and what you can do to improve your credit score to reach your financial goals.What Can You Qualify For With a 600 Credit Score?
With a 600 credit score, you won’t qualify for all financial products available in Canada. Some loans, credit cards, and mortgages will be out of your reach. The products you do qualify for will have higher interest rates or small credit limits than other products available. Below average credit will prevent you from qualifying for premium rewards credit cards and low-interest personal loans.
If you’re looking for a loan, credit card, or mortgage right away, there may still be some products available to you. The best way to see what specific products you qualify for is by using Borrowell. You can sign up for free to check your credit score and instantly see what products you qualify for before applying for one. Checking your credit score with Borrowell is a soft credit inquiry, so it won’t hurt your score!
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Here are some general answers for what products you qualify for with a 600 credit score.
Can You Qualify for a Personal Loan?
There are certain personal loans you can qualify with a 600 credit score. That said, you won’t qualify for the lowest interest rates available. Borrowers with good to excellent credit scores can receive larger amounts of money, low-interest rates, and other potential perks when taking out a personal loan. With a 600 credit score, your loan options may be more limited with rigid interest rates and terms.
Canada’s major lenders require that you have at least a fair above 650 to qualify for a personal loan. If your credit score is lower, you can still qualify for some bad credit loans, but these loans typically have higher interest rates.
If you have a 600 credit score and need a loan now, you can use Borrowell to find loans you qualify for based on your credit profile. You can find lenders who specialize in helping borrowers with below average credit.
Can You Qualify for a Credit Card?
With a 600 credit score, you may qualify for some standard credit cards with low credit limits. That said, you won’t qualify for premium cards with high credit limits and exclusive rewards.
A credit score of 660 or above is required to qualify with most major credit card providers. Premium credit cards, such as rewards cards and cashback cards, require good to excellent credit scores. Individuals with below average credit scores will have limited credit card options available to them.
If you have a 600 credit score and want a premium credit card, you should work on improving your credit score from below average to good so you can qualify for the best credit cards available. You can use Borrowell to get personalized tips on how to improve your credit score. You can also find out what credit cards you currently qualify for with your 600 credit score.
Can You Qualify for a Car Loan?
With a 600 credit score, your car loan options may be limited. Canadian car loan providers typically approve consumers with credit scores of 630 or above. If you have a credit score below 630, there are lenders that specialize in helping car buyers with below average credit.
If you have a 600 credit score and aren’t sure if you’ll qualify for a car loan, there additional steps you can take to improve your approval chances. These include getting a co-signer and making a larger down payment on the vehicle.
If you need a car loan right away, you can find specific lenders you match with on the Borrowell platform.
Can You Qualify for a Mortgage?
You’ll have a difficult time qualifying for a mortgage with a 600 credit score. You need a minimum credit score of 680 or above to qualify for the best mortgage rates with traditional lenders. Some mortgage providers approve borrowers with credit scores between 600 and 680, but these providers may charge higher interest rates.
If you have a 600 credit score, you may still qualify for a mortgage, but you'll likely need to choose an alternative mortgage lender and pay a higher interest rate. If you’re looking for a mortgage right away, you can find ones that you qualify for using the Borrowell platform.Check Why You Have a 600 Credit Score
Wondering why you have a 600 credit score? Your financial habits are likely impacting your credit score. Some of your financial habits are recorded on your credit report, including whether you pay your credit balances on time and how much of your total credit limit you are using up. If you miss bill payments or max out your credit cards, these negative pieces of information could show up on your credit report and drag your credit score down. Missing one bill payment can decrease your credit score by as much as 150 points, according to Borrowell internal data.
Reading your credit report and regularly monitoring your credit score can help you understand how your specific financial habits are impacting your credit score. You monitor your credit score and download your Equifax credit report for free by signing up for Borrowell. When you check your score, you’ll have a clear understanding of how your score has been calculated, what’s keeping your credit score below average, and what you can do to improve it.
What Goes into a Credit Score Calculation?
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Your score is calculated by Canada’s two major credit bureaus: Equifax and TransUnion. To calculate your score, credit bureaus use specific information found in your credit report. There are five key factors that impact your credit score, and each factor carries a specific weight towards your score. Here are the five main factors, along with how much of your credit score they account for:
Your payment history is the most important factor that impacts your credit score. Your credit report will show your payment histories for credit accounts, like credit cards and loans, along with other bills. If you miss a payment on one of your accounts, your lender might report it to the credit bureaus. The missed payment will be recorded on your credit report and can negatively impact your credit score. In general, negative payment information can stay on your credit report for seven years.
Your credit utilization rate is the second largest factor that impacts your credit score. Credit utilization is the amount of credit you’ve used up compared to the total amount of credit available to you. For example, if you have a credit card with a balance of $50 and a total credit limit of $100, your credit card utilization would be 50%. Your credit report will show your credit utilization for all your credit accounts. Using up too much credit can drag down your credit score.
Your credit history is included in your credit report and impacts your score. Your credit report will include the average age of all of your credit accounts and the age of your oldest credit account. Having a long credit history helps your credit score, while a short credit history can drag your score down.
Your credit mix is the different types of accounts that are listed on your credit report. Having a good mix of products on your credit report, including revolving credit and installment credit, will benefit your credit score. A good credit mix indicates that you can manage various accounts over time. That said, having many types of credit is only helpful if you pay your account balances on time.
A credit inquiry is when a lender or creditor requests to view your credit report. There are two types of credit inquiries: hard inquiries and soft inquiries. Hard inquiries can impact your credit score, while soft inquiries do not impact your credit score. Checking your credit score with Borrowell is a soft inquiry and doesn’t impact your score.
Each time you apply for a loan or credit card, the lender will make a hard credit inquiry to review your credit report. This credit inquiry gets recorded on your report. Hard credit inquiries typically have a short-term negative effect on your credit score. Having too many inquiries listed on your credit report can negatively impact your credit score. How to Improve a 600 Credit Score
If you have a 600 credit score, there are specific steps you can take to improve your credit score. Here’s a breakdown of just some of the ways you can increase your score from below average to good.
Pay your bills on time
Improve your credit score
Check your credit report for issues
Raise your credit limit
Get a secured credit card
Use a credit building loan
Pay Your Bills on Time
Paying your bills on-time is the most straightforward way to improve your 600 credit score. You should make it a consistent habit to pay your credit cards, loans, and other bills on time. Building a good payment history can help you increase your credit score over time.
To ensure that you pay all of your bills on time, every time, you can use Borrowell’s free bill tracking solution to monitor and predict your upcoming bills. If you have any overdue bills or accounts, you should prioritize paying off the oldest ones first.
Improve your Credit Utilization Ratio
The golden rule is that you should keep your credit utilization ratio under 30%. For example, if you have a credit card with a limit of $3,000, then you should keep the balance below $1,000.
If your credit score is below average, you may be spending too much on your credit cards and using up too much of your credit limit. You should look at your credit accounts and see how you can reduce some of your expenses. Reducing the number of purchases you make with credit can help you keep your credit utilization ratio in check.
Check your credit report for issues
Regularly monitoring your credit report can help you safeguard your financial health. By keeping regular tabs on your credit report, you can spot errors that could be bringing your credit score down. You can sign up for Borrowell to download and print your Equifax credit report for free.
If you spot an error on your credit report, it’s important to dispute it as soon as possible. You can dispute your credit report by providing the appropriate documents to Canada’s credit bureaus through mail or online.
Raise your Credit Limit
Increasing your credit limit can help you improve your credit score. You can try reaching out to your credit card provider and ask them to raise your credit limit. If you keep your spending the same but increase your credit limit, your credit utilization will decrease. For example, if you increase your credit card limit from $3,000 to $4,000, but keep your credit card balance at $1,000, then your credit utilization will decrease from 33% to 25%. This will help you keep your utilization rate under 30%
However, you will need to be careful to use the extra credit responsibly. It can be very tempting to increase your spending along with your new limit, which can lead to a slippery slope of compounding interest.
Get a Secured Credit Card
A secured credit card is a great option for improving your credit score. A secured credit card is backed by a cash or security deposit from the card owner. For example, if you’re approved for a credit limit of $1,000, you’ll give the lender a cheque for $1,000 as a security deposit and they in turn give you a card with $1,000 on it to spend.
When you use a secured credit card and make payments towards your outstanding balance, the lender will report this activity to credit bureaus. Your payment history and credit utilization will be added to your credit report, which can help you boost your credit score.
Secured cards can be valuable if you have a 600 credit score. It can be easier to get approved for secured cards as opposed to traditional credit cards. Some secured cards, such as Refresh Financial’s Secured Card, are designed to help you build a positive payment history and don't require a credit check to qualify.
Use a Credit Building Loan
Credit builder loans are not the most common type of loan in Canada, but they’re a smart way to build credit. If you want to improve your 600 credit score, there are loans that are specifically designed to help you build a positive payment history, which can help you improve your credit score. These loans don’t lend you money upfront. Here’s how they work.
Instead of loaning you money outright, the lender will set aside the money into a secured account. You’ll still make payments on your loan even though you can’t access the money. In the meantime, your payments are reported to a credit bureau. This will help you build your payment history and increase your score. At the end of the loan period, you’ll get access to your secured loan money. The Bottom Line
If you have a 600 credit score, you have a below average credit score. You might not get approved for certain loans and credit cards. Low-interest rates and premium credit cards may be out of your reach, and you may have trouble getting approved for car loans and mortgages. Many areas of your life could be impacted by your credit score, which should motivate you to improve it.
You can follow some of the steps outlined above to make positive changes to your financial habits and boost your credit score. You can monitor your credit score for free with Borrowell and receive personalized coaching on how to maximize your credit health. Improving your credit score is in your best interest, as a good to excellent credit score can help you more easily achieve your financial goals.
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