Finance
What Canadians Get Wrong About Credit Scores
By Maya Patel · 2026-03-20 · 7 min read
What is a credit score in Canada?
A credit score is a numerical summary of your credit history — a three-digit number that lenders use to assess how likely you are to repay borrowed money. In Canada, credit scores typically range from 300 to 900. A higher score generally indicates a stronger credit history and lower perceived risk from a lender's perspective.
Credit scores are calculated by credit bureaus — primarily Equifax Canada and TransUnion Canada — using information from credit reports that track your borrowing and repayment history. Lenders report your activity to these bureaus, which compile the data and calculate scores using proprietary formulas.
The Financial Consumer Agency of Canada (FCAC) provides consumer-friendly guidance on credit scores and reports and is a useful starting point for anyone trying to understand their credit situation.
How is a credit score actually calculated?
Credit bureaus do not publish their exact scoring formulas, but the major factors are publicly understood. In rough order of importance:
- Payment history: Whether you have made payments on time is the most significant factor. Missed or late payments reduce your score; consistent on-time payments strengthen it.
- Credit utilisation: The proportion of your available credit that you are using at any given time. Using a high proportion of your available limit (above roughly 30%) may reduce your score, even if you are making all payments on time.
- Length of credit history: How long your accounts have been open. Longer histories generally support higher scores, which is one reason why closing old accounts is not always a good idea.
- Credit mix: Whether you have different types of credit (credit cards, instalment loans, a mortgage) can contribute positively.
- New credit inquiries: Applying for new credit generates a "hard inquiry" on your file. Multiple hard inquiries in a short period can temporarily reduce your score.
How do I get my credit report in Canada?
Under federal law, Canadians are entitled to a free copy of their credit report from each bureau once per year. These free reports can be requested directly from Equifax Canada and TransUnion Canada either online or by mail.
Your free statutory report contains the underlying information — account history, payment records, public information — but does not always include the credit score itself. Credit score access is often sold as an add-on service by the bureaus and by financial institutions.
Many Canadian banks and credit card issuers now provide free credit score access to customers as part of their online banking service. This is typically a soft inquiry (it does not affect your score) and provides a reasonably current view of where your score stands.
Why are my scores different from Equifax and TransUnion?
Equifax and TransUnion use slightly different scoring models and may have different information on file, since not all lenders report to both bureaus. As a result, your scores from the two bureaus may differ by a meaningful amount.
For most practical purposes, both scores are drawn from the same underlying principle and will be in a broadly similar range if your credit history is consistent. If there is a large discrepancy, it may indicate that one bureau has information the other does not — which could be accurate data or could be an error worth investigating.
What is the most common error people make with their credit?
Missing payment due dates is the single most common way Canadians damage their credit scores. Even one missed payment can have a measurable negative effect, and the impact can persist for years.
Setting up automatic minimum payments on all credit accounts eliminates the risk of accidental missed payments. The minimum payment keeps the account in good standing from a credit perspective, even if it is not ideal from an interest cost perspective.
Closing old credit card accounts is another common error. Because credit history length affects your score, closing the oldest account on your file can reduce the average age of your credit history and potentially lower your score — particularly if the account has a high credit limit that was contributing to a favourable utilisation ratio.
The most reliable credit strategy for most Canadians is unremarkable: pay on time, keep balances low relative to limits, and avoid applying for new credit unnecessarily. Dramatic improvements generally require time rather than clever tactics.
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