Learn Credit Score in Canada What is a Good Credit Score?

What is a Good Credit Score?

Any score above 670 is considered a good credit score in Canada.

Your score says a lot about how you manage your finances. Lenders use it to determine if you’re a reliable borrower. It also affects the type of credit you’re approved for and even what kind of purchases you can make.

You may be surprised to learn how much this can impact your life, especially if you’re like most Canadians who carry some level of debt throughout their life.

This guide will thoroughly examine what a good score is, how this is calculated, factors that affect it, and much more.

What is a Credit Score?

A credit score is a three-digit score that sums up your habits as a credit user. Your score shows how well you manage credit and whether or not you’re a risky borrower. You get points if you manage credit responsibly and lose them if you have trouble paying your debts.

A good score gives you access to a greater variety of loans with favorable terms and lower interest rates. However, having a good score will not automatically get you approved for credit products.

How Are Credit Scores Calculated?

Several factors are taken into consideration when calculating your credit score.

Payment History (35%)

Your payment history tells lenders whether or not you pay your debts on time, defer them, and if you have payments in collections. Your payment history includes all debt, liens, and bankruptcy filings – it, however, doesn’t include mortgages. More recent payments have a greater impact on your score than older ones.

Credit Utilization (30%)

Credit utilization is the amount of credit you use relative to the amount allocated to you. For instance, if you have a $2000 credit card limit and use $1500, your credit utilization is 25%. A credit utilization of less than 30% across all products may increase your score.

Length of Credit History (15%)

Lenders prefer lending to people with a long credit history. They like to see that you have used your credit wisely and consistently. People with a non-existent or short credit history are considered risky borrowers who may default on loans.

Diversity of Credit (10%)

This shows lenders the type of credit products you have used in the past. A more diverse credit history is good for your score as it means you’re flexible with different credit products.

Soft and Hard Credit Checks (10%)

A soft check occurs when someone checks your score for non-lending purposes and doesn’t impact it. A hard check, on the other hand, occurs when you make a loan application. Too many hard checks over a short period can be an indication of financial difficulty or intensive credit shopping.

Graphic showing the credit score ranges in Canada

Benefits of a Good Credit Score

Besides increasing the chances of your loan approval, here are some benefits of maintaining a good score:

• More negotiating power: With a good score you can negotiate for better interest rates and terms on credit facilities. If you have a low score, lenders are unlikely to bulge to your terms.

• Higher borrowing capacity: Lenders will be willing to let you borrow more since you have demonstrated that you can pay back on time. As a result, you can make significant investments with a higher loan limit.

• No collateral requirements: some lenders will require you a deposit to secure your loan. By providing collateral, the lender has an asset to back up the loan if you miss payments. When you have good credit, lenders are more willing to offer you unsecured loans.

• Higher chances for credit card approval: having a good credit score doesn’t guarantee approval. However, your chances of being approved are greater—lenders assess different factors of your application to determine your loan eligibility.

• Better insurance rates: some insurance companies use credit-based insurance scores to evaluate consumers and determine how much premium to charge for a homeowner or car insurance policy. With a good score, you can pay less for insurance than other applicants with lower credit scores.

Credit Score Range in Canada

The credit score range in Canada is 300 to 900. Scores are categorized as follows:

Poor (300-579)

Borrowers in this range may have a high credit utilization ratio, have defaulted on several loans, or declared bankruptcy. The latter stays on your credit report for up to seven years. This score range makes it difficult for lenders to approve standard loans and credit cards.

Fair (580-669)

Borrowers with a fair credit score are approved for loans with higher interest rates which can be costly over time. They may be not eligible for lucrative credit products with rewards and cashback offers.

Good (670-739)

People in this score range may have defaulted on a loan or made several late payments. While they’re likely to be offered high-interest loans, they at least qualify for some worthwhile credit cards.

Very Good (740-799)

Individuals with a very good score are financially responsible. They have a low credit utilization score and hardly make late payments. They qualify for many upper-tier credit cards with cashback, rewards, and low-interest loans.

Excellent (800+)

Consumers with an excellent credit score pay off their balances in full and on time. They have zero or few late payments, and their credit utilization score is low across their lines of credit. Lenders approve them quickly for loans, high credit card and loan limits, and premium credit card benefits.

Borrowers with an excellent score have an all-access pass to credit products in Canada.

Graphic showing the credit score ranges in Canada

Difference Between Credit Rating and Credit Score

A credit score is a three-digit number that indicates your creditworthiness based on your entire credit history. A credit rating, on the other hand, is an individual rating of every item on your credit history. It ranges from 1 to 9 and indicates the type of credit products you use and if you make timely payments.

For instance, a 1 credit rating means that payments were made within 30 days of the due date. If your rating is 9, it means that you never made a payment or you have a debt repayment proposal with the bank.

What is the Average Canadian Credit Score?

According to Transunion, the average credit score in Canada is about 650.

The average score should not be confused with a good credit score. The average score is simply the sum of the credit scores of all Canadians divided by the total population of creditworthy individuals (18+ years). It tends to fluctuate according to the economic trends in the country.

Average Credit Score in Canada by Age

According to Equifax, Canadians aged 65+ years have an average score of 750 or higher. Younger Canadian citizens have lower scores because it takes time to build a credit history and develop good financial habits.

Here are the average scores for age brackets in Canada.

Ages 18-24
The 18-24 age group includes millennials, and these have an average score of 692. This score has improved by 11 points from the last decade, yet it remains lower than the other age groups.

However, it doesn’t mean that young people are irresponsible borrowers or credit card owners since other factors affect credit scores. For instance, the length of your credit history affects about 15% of your score. And, since most millennials have a short credit history, their score is relatively low.

Age 25-35
This age group has an average score of 697. Many people are starting a family at this age, looking for a house, buying cars, and urgently need loans to facilitate this lifestyle. You can get favourable loan terms with this score.

Ages 36-45
The 36-45 age group has an average credit score of 710. Consumers have a higher score at this age because they have had more than ten years of credit history. They may have a mix of different types of credits, such as credit cards, mortgages, car loans, which have helped them to improve their creditworthiness.

Ages 46-55
The score of this age group is 718. Since most people in this group are about to retire, many have made significant efforts to pay off their debts. With 35% of payment history affecting credit score, most lenders are comfortable giving members of this age group a huge loan.

Ages 55+
This age group has an average credit score of above 737. This is a high score because most people have paid off their mortgages and car loans at this age. In fact, many people start selling their homes at this age because they are heading into retirement.

Graphic showing the average credit score in Canada by age

Source: Equifax Canada consumer credit database

Guide to Credit Scores in Canada

To pursue a comfortable lifestyle in Canada, you’ll need to achieve different credit score limits for various situations. We’ll examine some of the absolute necessities and suitable credit scores to attain them.

Mortgage in Canada

The minimum credit score needed for your mortgage to be approved is 640, especially if you’re borrowing from commercial banks. However, you can still get a mortgage with a score of up to 620. This depends on your lender and other factors that affect you as the borrower, including income and amount of debt.

Additionally, your loan amount can be compared with your credit score to see if you’re liable for a mortgage. For instance, lenders may view a higher loan amount as riskier if you have a low credit score.

However, you may have a poor score and wish to own a home. A loan for this purpose may be approved by some private lenders, but their interest rates will likely be higher than that of conventional lenders. It is recommended that you work on improving your credit score to avoid spending more.

Rent an Apartment in Canada

If you’re looking to rent an apartment, you should have a credit score of at least 620 or higher. It’s one of the things your landlord will look at before approving your application. This will be used to determine if you’ll pay rent in full and on time.

A bad score can make apartment hunting stressful as it tells potential landlords you may be late with rent payments.

Car Loan in Canada

If you have a credit score of above 660, you can easily qualify for a loan at any car dealership. You may experience some setbacks if your score falls between 560 and 659.

Although banks are strict and preferential to higher scores, you can still get a car loan with a score below 600 from many money lenders and auto dealerships.


Equifax considers a score of above 670 as good. Lenders will offer higher loan limits with better incentives.


A TransUnion credit score of 650 or higher is a good score for Canadians. Aim for this to maintain for the best chances of loan approval with good interest rates.

Improve Your Finances with a Good Credit Score

You can start working to improve your credit and build the financial future you want today. Begin by developing and maintaining good financial habits like keeping your expenses within your income range and paying your loans on time.

If you are still working to build your credit score and would like to access a quick short-term loan, look no further than iCASH. You can still get a loan even with a bad credit score. We don’t ask for any documentation and you’ll get your money in minutes after the approval.