Your credit score ranges between 300 and 900, but most scores fall between 600 and 750. In Canada, a credit score between 713 and 740 is considered good, and a score between 741 and 900 is considered excellent.
Your credit score can make your financial world go round, and the higher your score, the better your chances of qualifying for the best rates. Lenders use your credit score to determine whether or not to offer you credit. Your credit score will impact what rates you qualify for on mortgages, personal loans, car loans, and credit cards. Your credit score can even help or hinder your job or apartment search, so it's crucial to prioritize growing this score.
Your credit score can fall into five different categories, ranging from poor to excellent. Here's a more detailed breakdown of what each category means:
If you have a credit score in this range, you have most likely had some financial problems in your past. You won’t qualify for most credit products and will need to start rebuilding your credit score. There are secured cards and other tools designed for Canadians to help them repair their bad credit scores.
If your credit score is in this range, you won’t qualify for the best rates from Canada’s major lenders. That said, there are still alternative and online lenders that will work with you to provide the funds you need. The interest rates offered on these loans will be higher than average, so you may want to take some time to improve your credit score before applying for loans.
According to 2021 data, the average credit score in Canada is 660. With a fair credit score, you'll have access to loan products from most prominent Canadian lenders, but you won't have access to the lowest rates. Some top-tier rewards credit cards will be available to you, but improving your credit score can help you unlock access to the best credit cards.
If your credit score falls in this range, you have a good credit score. This is the level where you’ll start receiving preferential rates on mortgages, car loans, and personal loans. Lenders know that Canadians with a credit score this high have a history of responsible borrowing, and so you will have access to the top lenders in Canada.
If your credit score is 741 or higher, you are in the top tier of borrowers in Canada. This tier affords you access to Canada's lowest possible interest rates and the opportunity to work with the biggest lenders. 25% of Borrowell members fall into this category.
It may not seem like your credit score impacts your daily life, but your credit score influences almost every financial move you make. A good credit score helps you access four major things:
Buying a house in Canada is one of the most significant financial commitments you will ever make. You need a minimum credit score of 680 or above to qualify for the best mortgage rates with traditional lenders. A score of 750 will put you in excellent territory. If your credit score is below 680, you may still qualify for a mortgage, but you'll likely need to choose an alternative mortgage lender and pay a higher interest rate.
To qualify for the top loan rates with traditional lenders, you should have a 650 or above credit score. That said, if your credit score is lower, you can still qualify for a personal loan. You can get a loan with bad credit, but it may be with an alternative lender, and your interest rates may be higher. If your credit score is extremely low and you don't qualify for a personal loan, you can use a co-signer who will guarantee the loan on your behalf.
Most credit card providers in Canada require a credit score of at least 660 to qualify. When it comes to credit cards, the interest rates are set, so you will not secure a better interest rate with a better credit score, but you will secure a higher credit limit. If your credit score is too low to qualify for a credit card, you can apply for a secured card available to Canadians with very low credit scores.
Your credit score is determined by various factors, each with its own weighted importance in the credit scoring formula. Here's a breakdown of the factors credit bureaus use to determine your credit score, along with how much weight they carry towards your credit score:
If you've checked your credit score and found it is lower than you'd like, you can take steps to improve your credit score. The following steps have the two-fold benefit of improving your credit score and your finances at the same time.
Your credit score is an integral part of your financial toolkit, but there's remarkably little information out there about what is considered a good credit score. If your credit score is 713 or above, you have a good credit score in Canada. With a good credit score, you’ll have access to lower interest rates, better credit terms, and higher credit limits from Canada's top lenders. If your credit score is below this threshold, there’s always room for improvement. With the steps and resources outlined above, you’ll be on the right track to building a good credit score.
Borrowell® is a registered trademark of Borrowell Inc. All Rights Reserved. The Equifax credit score is based on Equifax’s proprietary model and may not be the same score used by third parties to determine your credit profile. The score provided to you for educational use is the Equifax Risk Score.
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