What is a Good Credit Score in Canada and Why Does it Matter?

Jack Prenter, Founder of Dollarwise

In Canada, a credit score reflects your creditworthiness, indicating how likely you are to repay borrowed money. Companies like Equifax and TransUnion calculate these scores based on your credit history, payment habits, and debt levels. 

So, what is a good credit score in Canada? A higher score (usually 660+) suggests responsible borrowing, making getting loans or credit cards easier with better terms. Maintaining a good score matters because lenders use it to assess risk when you apply for credit. 

Timely payments, low credit utilization, and diverse credit accounts positively impact your score. Understanding and managing your credit score is crucial for obtaining favorable financial opportunities in Canada.

What is a credit score range in Canada?

As a Canadian, you can expect the credit score to range from 300 to 900. You want to reach a number as close as possible to 900 because this makes you the least risky type of client in the banks’ eyes. 

There are a few subcategories of credit score ranges that are helpful in determining where you stand and which financial services you can get. 

• Poor (300-559)





• Fair (560-659)





• Good (660-724)





• Very Good (725-759)





• Excellent (760+)

There are two credit bureaus in Canada that calculate your credit scores using a method that is unbeknownst to us. However, these 5 factors are most commonly used in a large majority of credit score models: 

Payment History: Are you timely with your loan and credit payments? Payment history contributes about 35% (on average) to your overall credit score. 

Credit History: If you’ve had your accounts open for a long time, it will positively impact your credit score. The impact of each category can vary depending on which credit model is being used but on average, your credit history contributes about 15% to your credit score. 

Debt-to-Credit Ratio: This is the amount of revolving credit vs how much credit you still have remaining and is a common characteristic that is used for calculating your credit score. This factor generally contributes about 30% to your credit score. 

Public Records: If you have any debts, liens, bankruptcies, or other negative remarks, they will negatively impact your credit score. 10% of the overall credit score consists of public records.

New Credit Inquiries: Each time a creditor or lender pulls your credit, you’ll earn a few negative credit score points. If you end up with too many such pulls during a short period of time, the effects will be even more drastic. These also provide 10% to your credit score. 

What is a good credit score in Canada?

A good credit score in Canada is typically considered to be around 660 or higher. This score range indicates a solid credit history, showcasing responsible credit management. Lenders often view scores above 660 as less risky, potentially leading to better borrowing terms. 

However, different lenders may have varying criteria; some might consider scores above 700 as excellent, further improving borrowing prospects. Regardless, aiming for a credit score above 660 sets a positive financial foundation, enabling access to better credit opportunities across a wide range of lenders.

What is a bad credit score in Canada?

A bad credit score in Canada generally falls below 660 in the credit score range of 300 to 900. Scores in this lower range may signal a history of missed or late payments, high credit card balances, defaults, or bankruptcy. 

Such a score could result in challenges when seeking new credit, as lenders might perceive individuals with lower scores as higher-risk borrowers. Securing loans or credit cards could become more difficult, and if approved, the terms may involve higher interest rates or lower credit limits. 

What is the average credit score in Canada?

The average score in Canada is 668 which falls in the ‘Good’ category of credit scores. We’ve calculated this by averaging the scores for each city and province. Check out how their credit scores look like in the table below:

Interestingly, credit scores vary by age groups as well, evidenced by the most recent Generational Study by Equifax. Here’s the breakdown of the average credit scores by age group:

• Ages 18-25: 692





• Ages 26-35: 697





• Ages 36-45: 710





• Ages 46-55: 718





• Ages 56-65: 737





• Ages 65+: 750

What credit score is needed to buy a house (i.e. qualify for a mortgage)?

To buy a house with a mortgage, your credit score needs to be typically around 600 or higher, although a score of 650 or above is often recommended for more favorable terms. 

Mortgage lenders in Canada consider various factors beyond just the credit score, including your income, debt-to-income ratio, and employment history. A higher credit score is necessary for mortgage qualifications or real estate purchases due to the overall financial ‘strain’ of such large spending. 

However, some lenders might approve mortgages for lower credit scores with certain conditions, such as a larger down payment or higher interest rates. Understanding your credit score's impact on mortgage approval is crucial when aiming to purchase a home in Canada.