What is considered a good credit score in Canada and what is the average credit score of the general public?
A credit score is a financial measure that tells you and others how you are doing financially and whether you can be trusted to use credit responsibly.
You’d be surprised how much a three-digit number can affect your life, especially if you’re like the average Canadian who will carry some level of debt at some point in his or her life.
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What is a credit score?
In Canada, a credit score is a number from 300 to 900. Your scores are calculated using the information in your credit report and are seen as a measure of your creditworthiness.
When you apply for a loan, the lender draws up your credit profile to assess the default risk you face and you may not be able to meet your repayment obligations.
Whether it’s for a mortgage loan, new car financing, or a new credit card, your credit score can mean the difference between being approved (for a competitive interest rate) and being disqualified (or offering a higher interest rate).
It’s not just about debt and financing. Credit scores affect other areas of our lives as well. For example, for some work, you may have to pass a credit check.
In the United States, credit scores are classified a little differently and range from 300 to 850.
What is a good credit score in Canada?
The 2 major credit bureaus, Equifax and TransUnion, use custom scoring models to calculate your credit score.
Although the parameters they consider are quite similar, there may be slight differences in the credit scores reported by both companies.
According to Equifax, a good credit score falls in the range of 660-724.
- 741 – 900: Excellent
- 713 – 740: Good
- 660 – 712: Fair
- 575 – 659: Below average
- 300 – 574: Poor
With a good credit score, you have a good chance of qualifying for a loan or credit facility, however, you may not be offered the lowest interest rate.
As your credit score moves past and above the “good” threshold, creditors view you more favorably and treat you as a less risky borrower.
With an “excellent” credit score, you are more likely to qualify for the best rate available.
What is the average credit score in Canada?
There are all sorts of averages for comparing credit scores in Canada. For example, the average credit score varies significantly based on age group, province, and even the city in which you live.
How to check your credit score
Canadians can access their credit score directly from Transunion and Equifax ($ 20).
Alternatively, companies like Borewell offer you a free credit score and it is updated every month at no charge.
Brownell was the first Canadian company to offer a free credit score in Canada.
In addition to its free credit monitoring services, the company offers personal loans, mortgages, insurance, credit cards, and investment products.
More than 1 million Canadians have received their credit score through the Borewell platform.
How to increase your credit score
Here are some strategies you can use to improve your credit score.
- Pay your bills from time to time. Always pay the lowest and better yet, pay your full balance every month.
- Do not carry more than 30% of your total balance. The less the better. In some cases, it may be wise to ask for a higher credit limit so that you can keep your usage ratio low.
- Avoid new credit purchases unless absolutely necessary.
- Monitor your credit report for errors. If you find an error in your credit report, contact the credit bureaus and ask them to report the error and ask them to correct it.
- Avoid closing your oldest credit accounts, unless absolutely necessary. Older accounts can add to your credit age and increase your credit score.
Conclusion
A good credit score in Canada starts at 660. The higher it is, the easier it is for you to qualify for credit. What is a good credit score in Canada for international students?
I use Borewell to monitor my credit and make sure I’m not a victim of identity theft or fraud. Also, the monthly credit scores and credit report updates they provide make it easier to track my progress over time.
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