Credit score

A credit score comes from the information in your credit report. It shows how risky it would be for a lender to lend you money. Your credit score is a three-digit number, typically between 300 and 850. You can access your credit score online from Canada’s main credit bureaus. Other companies may also offer to provide your credit score for free. Some may ask you to sign up for a paid service to get your score.

Credit bureaus in Canada

There are two main credit bureaus in Canada, Equifax and TransUnion. These are private companies that collect, store and share information about how you use credit.

How a credit score is calculated

A credit score is based on credit history: number of open accounts, total levels of debt, repayment history, and other factors. Credit bureaus and lenders don’t share the actual formulas they use to calculate credit scores.

According to the Financial Consumer Agency of Canada (FCAC), factors that may affect your credit score include:

• how long you’ve had credit
• how long each credit has been in your report
• if you carry a balance on your credit cards
• if you regularly miss payments
• the amount of your outstanding debts
• being close to, at or above your credit limit
• the number of recent credit applications
• the type of credit you’re using
• if your debts have been sent to a collection agency
• any record of insolvency or bankruptcy

How to improve your credit scores

Some of the steps you can take that can help increase your credit score are:

• Review your credit reports to ensure there are no inaccuracies, unpaid balances or past-due accounts
• Paying debts on time is an important consideration in your credit score. Payment history is a significant factor so it is important to avoid late payments
• Keep credit utilization rate low. Your credit utilization ratio is the amount of overall credit you have compared to the balance that is reported to the credit bureau.
• Limit new account applications. New credit account applications usually involve a hard inquiry on your credit report, which has the potential to negatively affect your credit score
• Keep old accounts open. A factor in credit scores is average age of accounts” so keeping the accounts open can help maintain the length of your credit history.

See also

• Credit card
• Managing debt

Further reading

• Financial Wisdom Forum topic: "Credit Scores"
• Financial Wisdom Forum topic: "What caused my credit score to drop"

External links

• "Credit Score Education - Guide to Credit Scores". Equifax Canada.
• "What is a Credit Score – Credit Score Range". Equifax.
• "Do you know your credit score?". TransUnion Canada.