How Credit Scores Work in Canada

Your credit score is a three-digit number, usually between 300 and 900, that sums up how you’ve handled borrowed money in the past. Lenders use it to guess how likely you are to pay back what you borrow. Landlords, cell phone providers, and even some employers check it too.

In Canada, two companies calculate this number: Equifax and TransUnion. They don’t always agree, because they don’t always have the exact same information on file for you. That’s normal, and it’s one reason your score might look slightly different depending on where you check it.

What actually goes into the number

Five main factors drive your score, though the exact formula is proprietary and never fully published.

Payment history carries the most weight. Whether you pay bills on time, every time, tells lenders more than almost anything else. A single missed payment can stay on your report for years and pull your score down noticeably.
Credit utilization is next. This is how much of your available credit you’re using at any given time. If your credit card limit is $5,000 and you’re carrying a $4,000 balance, that 80% utilization signals risk, even if you pay it off in full every month before the statement closes.
Length of credit history matters because lenders like to see a track record. An account you’ve had for eight years says more than one you opened last month.
Credit mix looks at whether you’ve handled different types of credit, like a credit card, a car loan, or a line of credit. It’s a smaller factor, but managing a mix responsibly helps.
New credit inquiries are the smallest piece, but applying for several products in a short window can ding your score temporarily, since it can look like you’re suddenly short on cash.

What counts as a “good” score

Ranges vary slightly by scoring model, but a rough guide looks like this:

300–559: Poor
560–659: Fair
660–724: Good
725–759: Very good
760–900: Excellent

Most mainstream credit cards and mortgages want to see “good” or better. Below that, you’ll still find products, but expect higher interest rates or a request for a co-signer.

Why the number changes over time

Your score isn’t fixed. It’s recalculated every time new information hits your file, which can happen monthly or even more often. Pay down a balance, and it can tick up within weeks. Miss a payment, and it can drop fast, then take much longer to recover.

This is why checking your score once and assuming it’s permanent is a mistake. It reflects a snapshot, not a life sentence.

A quick myth to clear up

Checking your own credit score does not hurt it. This is called a “soft inquiry” and has no impact. What can cause a small, temporary dip is a “hard inquiry,” which happens when a lender pulls your file because you’ve formally applied for credit. One or two of these are normal. A pattern of frequent applications is what raises flags.

Where this leaves you

Understanding the mechanics behind your score turns it from a mystery number into something you can actually influence. Payment history and utilization alone account for the bulk of it, and both are within your control starting with your very next bill.

If you’re just starting to build credit, or trying to recover from a rough patch, the good news is that none of this requires drastic action. Small, consistent habits, paying on time and keeping balances low, move the number more reliably than any quick fix ever will.

FAQ

No. Credit scores don’t factor in income directly. Lenders may ask about income separately when you apply for credit, but it’s not part of the score calculation itself.

Not every lender reports to both bureaus, so each one may have slightly different information on file, which produces slightly different scores.

Checking every few months is enough for most people. It won’t hurt your score, and it helps you catch errors or signs of fraud early.