Good Credit Score in Canada, what is a Good Credit Score in Canada

When you apply for a loan, having a high credit score might help you be accepted with favourable rates and terms. However, determining if a certain credit score is excellent or not is difficult. That’s because depending on the sort of loan you’re asking for and the lender examining your paperwork, different lenders may have different standards for what constitutes excellent credit. It’s possible that the scores you receive will depend on the credit scoring algorithm that each lender utilized when you add them all together.

Good Credit Score in Canada

When you apply for new credit, you aren’t informed of the precise threshold that separates a good credit score from a negative one for that specific lender. That’s because lenders often don’t make their credit score requirements public. However, 90% of Canadian lenders utilize the most popular American credit scoring algorithm, FICO, which provides some useful data that consumers may use as a reference. In Canada, the most popular credit ratings have a scale from 300 to 900. A credit score between 660 and 724 on that scale is often regarded as “good.”

What Are the Ranges for Credit Scores?

The two main Canadian credit agencies, Equifax and TransUnion, are the recipients of the credit scoring model that FICO offers in Canada. These two credit bureaus each have a unique scoring system. TransUnion utilizes the CreditVision Scoring Model, whereas Equifax uses the Equifax Risk Score. While TransUnion’s CreditVision Scoring Model includes data from the most recent 24 months, Equifax’s Risk Score uses data from the most recent 81 months. Websites like Borrowell and Credit Karma, which enable users to sign up for free accounts and check their credit scores and reports while attempting to sell them loans and credit cards based on their credit histories, also purchase these credit ratings. You may learn why your credit score might vary so much from time to time by looking at the FICO score, the algorithms used by each credit agency, and the information displayed when you check your credit score for free on a website. Credit score ranges are the only thing we can rely on with any certainty.

Score ranges for FICO

FICO employs a rating range of 300 to 900 and is the oldest and most popular credit score brand. There are various FICO scoring models that are industry-specific and employ a different scale. For instance, the auto-FICO score ranges from 250 to 900. FICO typically classifies a credit score as bad if it is 579 or lower. 580 to 669 is considered fair, 670 to 739 is good, 740 to 799 is very good, and 800 and above is outstanding or extraordinary.

They assess credit like this:

  • 35% payment history
  • 30% credit utilization
  • 15% length of credit history
  • 10% new credit accounts
  • 10% credit mix (types of accounts)

FICO Scores have the same function, regardless of range. They aid lenders in estimating the likelihood that a borrower will not repay a loan. The smaller the risk you pose to everyone who gives you money, the better your credit score.

Equifax Risk Score

Equifax, like FICO, claims that credit scores range from 300 to 900, although their evaluation of credit is a little bit different. According to Equifax, bad credit is defined as starting below 560, fair credit as 560 to 660, good credit as 660 to 724, very good credit as 725 to 759, and excellent credit as 760 and above. Equifax also aids potential lenders in determining your creditworthiness.

Here’s how Equifax’s credit assessment breaks down into a credit score:

  • 35% – Your payment history.
  • 30% – Your used credit vs. your available credit, or credit utilization.
  • 15% – The length of your credit history.
  • 10% – Public records such as bankruptcy.
  • 10% – Number of inquiries into your credit file.

TransUnion Credit Vision Score

TransUnion classifies its credit score ranges as very poor (300-600), poor (601-660), fair (661-720), good (721 – 780) and excellent (781-900).

TransUnion’s main factors that go into these credit score ranges are:

  • Your payment history.
  • Your balances, or how much you owe.
  • Age of your credit history.
  • New credit or inquiries.
  • The different types of credit you have.

TransUnion doesn’t publish the percentage breakdown of the main factors, but it’s likely similar to Equifax’s breakdown.

How To Improve Your Credit Score

It is worthwhile to take action to raise your credit score over time if you have a score that is ordinary or below. Here are some actions you might take:

Every month, pay your payments on time. The one aspect that has the most impact on your score is late and missing payments.

Reduce your credit use. The percentage of your credit limit that you actually utilize is what’s known as credit usage. You are using 50% of your available credit, for instance, if your credit limit is $10,000 and your debt is $5,000. Aim for 30% or less overall and on each credit card, if at all feasible.

Investigate your credit report. Following the steps found here and here will allow you to see your free credit reports from each of the two credit agencies once each year. Reviewing your credit reports will help you identify any mistakes that might be harming your score, so you can take action to fix them.

Think of a secured card. Building a credit history with a secured card might be an excellent place to start if you have weak or poor credit. To have the best chance of seeing the benefits of your excellent payment habits improving your credit status, use a secured card that reports to all three credit agencies.

A good credit score might vary depending on who you ask.

Although the three credit scoring models from FICO, Equifax, and TransUnion include ranges that give a basic indication of how lenders may perceive certain credit score ranges, lenders and other businesses can, and frequently do, have varying views on creditworthiness.

For instance, just because you have an excellent credit score in the eyes of an auto dealer doesn’t imply a mortgage lender would see you favourably in terms of your credit risk. Each lender has its own standards for determining a good credit score against a low score, as well as its own boundaries for each.

What Credit Score Is Ideal for a Mortgage?

Compared to other forms of personal finance, applying for a mortgage may depend more on your credit score. A high credit score may enable you to avoid paying hundreds of dollars in interest each year on your mortgage. The prevalent consensus in Canada is that the lower your credit score, the lower your interest rate on a mortgage will be. It may be challenging to qualify for a mortgage you can afford if your credit score is below 600 or 650. There is no one-size-fits-all solution, though, as there are several mortgage brokers that focus on serving borrowers with poor credit, and all mortgage lenders have different ways of evaluating credit scores and reports. If you can afford the monthly payments, you can also try to reduce your interest rate by selecting a shorter amortization time.

There are additional expenses that will come into play, such as Canada’s down payment regulations, which set the required down payment at 5% for homes costing less than $500,000 and 5% for the first $50,000 for properties costing more, with 10% applied to the balance. For down payments that are less than 20% of the purchase price, Mortgage Loan Insurance (MLI) is additionally necessary. Mortgage loan insurance shields lenders against default and enables borrowers with down payments under 20% to take advantage of the same interest rates as those with down payments of 20% or more. If you own or rent the property, if the loan will purchase the property, if it is required for construction on the property, if you, as the mortgage holder, are refinancing, and how much you put down as a down payment, all of these factors will affect how much your mortgage loan insurance premium is. The bigger the premium, the more you are borrowing, but you are also saving on interest, so that partially offsets expenses.

Closing expenses, including legal fees, realtor commissions, property transfer taxes, and HST, are unavoidably necessary in addition to Canada’s mortgage regulations, although they differ by province.

A FICO Score of 760 or better is often required to be eligible for a mortgage lender’s lowest rates. Of course, obtaining a favourable mortgage rate requires more than simply a stellar credit rating. But when you apply for financing, the three-digit numbers that are sold together with your credit reports are a crucial aspect that mortgage lenders take into account.

What Credit Score Is Ideal for an Auto Loan?

Vehicles are frequently among the most costly expenditures the typical adult in Canada makes after a mortgage. The average cost of a new car in Canada was $50,758 in 2023, reaching $50,000 for the first time, according to, the country’s largest online auto marketplace.

Having good credit can help you save thousands of dollars when financing a large item like a car. For a car loan, lenders typically want a credit score between 630 and 650, but there is always hope if your score is just 620. Finding the appropriate lender that will deal with you may take some time, but individuals with credit scores around 620 may expect to pay an average interest rate of 6.57% for a new automobile and 10.33% for a used car. However, you would receive an interest rate of 4.03% for a new automobile and 5.53% for a used car if your credit score was in the prime range of 660 to 719.

Let’s assume that a person with a FICO score of 620 wants to purchase a new automobile, and the car dealer informs them that they may be eligible for a $38,000 loan with a 60-month term if they meet certain requirements.

The FICO Loan Savings Calculator estimates that your loan’s APR in February 2023 will be 11.54%, and your monthly payments will be $836. You would also pay an additional $12,186 in interest over the course of the loan.

Even if you are accepted, a $836 monthly auto loan payment is a sizable sum. Let’s therefore imagine that you press the pause button and resolve to concentrate on raising your credit score prior to applying for a loan. Later on, when you reapply, you find out that your score has increased to 670, which is what most credit scoring models classify as a “good” credit score.

The FICO Loan Calculator currently predicts that you would be eligible for an APR of about 9.17% with a credit score of 670. With that interest rate, the same $38,000 vehicle loan would require a $792 monthly payment. Over the course of the loan, your total interest payment would be $9,520.

You would save an additional $2,666 over the course of your loan since you raised your credit score from low to good.

You may be able to save more money if you have a higher credit score. You’ll probably be eligible for the finest financing deals from a car lender if your credit score is at least 720; a score of 800 is even more reliable.

What Credit Score Is Good for a Credit Card?

Before qualifying you for a new credit card, credit card issuers, like other lenders, will look at your credit score to assess the risk of doing business with you. You might need to have outstanding, and possibly even great, credit to be eligible for a premium travel rewards credit card. A excellent credit score could be adequate for approval for various credit card types, including ones with low interest rates.

Beyond determining whether you qualify for a credit card, your score can have a big influence on the APR and other conditions of your account. Credit card companies use credit scores to establish the rates for the accounts they accept as well as to help them decide whether or not to approve applications.

Consider the finest credit cards on our list. You’ll see that some credit card offers include an APR range rather than a precise rate. A credit card company might advertise an APR of 19.99% to 24.49%. The card issuer will base the final rate it gives you on the state of your credit, which is why that range exists.

It might be challenging to determine a certain figure that a credit card company considers to be a good score for two reasons:

Each credit card company has its own credit score cutoffs. If you have a certain number, you might be able to get the best conditions from one card issuer, but another bank may not treat you the same way.

Credit card companies employ several credit rating methodologies. Some credit card companies employ the 399–900 FICO score methodology. Some people might want to utilize TransUnion CreditVision or Equifax Risk Score instead. Finally, some issuing banks examine new account applications using unique, proprietary credit rating algorithms.

Remember that any credit score a lender determines for you will be based on the same information—the details contained in your credit report. So, regardless of who analyzes your credit and whose scoring methodology the firm employs, your credit scores should be in good shape if you concentrate on keeping accurate, favourable credit reports.

Bottom Line

The quick answer is that it is extremely important to build and maintain a decent credit score. Savings might be significant when you work hard to build a good or higher credit score. A high credit score has a potential lifetime worth of tens of thousands of dollars.

Here are a few instances where having a high credit score might be advantageous for you.

  • When you need new loans and credit cards, it could be simpler to qualify for them.
  • Lenders could offer you more favourable conditions and cheaper interest rates.
  • It could be simpler to rent an apartment or buy a house.
  • Depending on your province of residence, you might be able to save money on your homeowner’s and vehicle insurance.
  • For new utility accounts, loans, and other things, there can be a lower down payment required.