What Is a Credit Score and How Is It Calculated in Canada

A clear understanding of your credit score Canada is essential for renting, getting a mortgage, qualifying for a credit card or loan, and managing your financial health. This guide explains what a credit score is and how is credit score calculated in Canada, how to check it, and practical steps to improve and protect it.

Read time:4 minUpdated: Sep 06, 2025

A clear understanding of your credit score Canada is essential for renting, getting a mortgage, qualifying for a credit card or loan, and managing your financial health. This guide explains what a credit score is and how is credit score calculated in Canada, how to check it, and practical steps to improve and protect it.

What is a credit score?

  • Definition: A credit score is a numeric summary of the information in your credit report that helps lenders assess your credit risk.

  • Common range: In Canada most credit scoring models use a range roughly between 300 and 900, where higher scores indicate lower risk.

  • Who uses it: Banks, credit card companies, mortgage lenders, auto lenders and some landlords or utility companies.

Credit bureaus vs. credit scores

  • Credit bureaus: In Canada two major credit bureaus collect and maintain credit reports — [Equifax Canada] and [TransUnion Canada]. They supply reports and scoring to lenders.

  • Credit report: A detailed record of credit accounts, balances, payment history, inquiries and public records (collections, bankruptcies).

  • Credit score: A calculated number derived from that report. Different bureaus and lenders may use different scoring models, so your score can vary between sources.


How is a credit score calculated in Canada?

There is no single universal formula. However, scoring models generally weigh the same core factors. Typical components are:

  1. Payment history (most important)

    • What it is: On-time vs. late payments, accounts in collections, bankruptcies.

    • Why it matters: Lenders want to see that you repay on time.

  1. Amounts owed / credit utilization

    • What it is: How much of your available revolving credit (credit cards, lines of credit) you're using.

    • Guideline: Lower utilisation (often under 30%) typically helps scores.

  1. Length of credit history

    • What it is: Age of your oldest account, average age of accounts.

    • Why it matters: Longer, well-managed histories show stability.

  1. New credit / inquiries

    • What it is: Recent applications for credit (hard inquiries) and recently opened accounts.

    • Impact: Multiple recent applications can lower your score.

  1. Credit mix

    • What it is: Variety of account types — instalment loans (auto, mortgage) and revolving credit (credit cards).

    • Why it matters: A healthy mix can be favourable, but it's a smaller factor.

Note: Exact weights vary by scoring model. Lenders often use proprietary models that combine bureau data with their own criteria (income, employment, down payment).


Typical credit score ranges (approximate)

  • 300–559: Poor (may be declined or face high interest).

  • 560–659: Fair (limited credit options, higher rates).

  • 660–724: Good (competitive products available).

  • 725–759: Very good.

  • 760–900: Excellent (best interest rates and access).

Reminder: These ranges are illustrative. Different lenders and bureaus may classify scores differently.


How to check your credit score and report in Canada

  1. Get your credit report from the bureaus

    • Order your consumer disclosure from [Equifax Canada] and [TransUnion Canada].

  2. Use government resources

    • Read the FCAC guidance on credit reports and how to get them: [Financial Consumer Agency of Canada (FCAC)].

  3. Use free services and calculators

    • Some banks and credit card providers offer free credit scores or snapshots. Checking your own score is a soft inquiry and won't hurt your credit.

  4. Request corrections

    • If you spot errors, follow bureau dispute procedures and contact the creditor. Use the bureau pages linked above for dispute steps.


Step-by-step: How to dispute an error

  1. Obtain a copy of your credit report from the bureau showing the error.

  2. Collect supporting documents (statements, letters, proof of payments).

  3. Submit a dispute online or by mail to the bureau with evidence.

  4. Follow up — bureaus usually investigate with the creditor and respond within about 30 days.

  5. Escalate if needed to the creditor or to the bureau's complaint process; contact the [FCAC] for guidance.


Practical steps to improve your credit score (checklist)

  • Pay bills on time, every time.

  • Reduce credit card balances — target under 30% utilisation; lower is better.

  • Avoid opening many new accounts at once.

  • Keep older accounts open to maintain account age, unless fees justify closure.

  • Check your reports annually for errors and identity theft.

  • Use a mix of credit responsibly (a small instalment loan and a card can help).

  • Deal with collections: pay or negotiate and ensure updates are reflected on your report.


When credit score matters most

  • Mortgages: Lenders combine scores with income, down payment and amortization. For insured mortgages, mortgage defaults are assessed by insurers and lenders — see [Canada Mortgage and Housing Corporation (CMHC)] for guidance.

  • Credit cards & loans: Higher scores improve approval odds and interest rates.

  • Renting or utilities: Landlords and utility companies may check scores or report payment history.


Common misconceptions

  • Checking your own score hurts it: False — consumer checks are soft inquiries and do not affect scores.

  • Closing cards always helps: Not necessarily — closing a long-standing card can reduce average account age and increase utilisation.

  • Only credit cards matter: All credit accounts and public records (collections, bankruptcies) affect scores.

  • Credit scores are permanent: No — time, payments, and corrections change scores.


Identity protection and fraud

  • Monitor accounts and credit reports frequently.

  • Freeze or lock your file with bureaus if available, or place a fraud alert if you suspect identity theft.

  • Report scams and identity theft to the [Canadian Anti-Fraud Centre].


When to seek professional help

  • If you're dealing with complex errors, identity theft, multiple collections, or bankruptcy, consider speaking with a licensed consumer proposal trustee, a mortgage broker for lending issues, or a registered credit counsellor registered with recognized provincial bodies.


Quick resources (Canada)

  • [Equifax Canada] — consumer credit reports and disputes

  • [TransUnion Canada] — consumer credit reports and disputes

  • [Financial Consumer Agency of Canada (FCAC)] — guides on credit reports and consumer rights

  • [Canada Mortgage and Housing Corporation (CMHC)] — mortgage and insured mortgage info

  • [Canadian Anti-Fraud Centre] — report scams and identity fraud