Canadian Credit Scores 101: What You Need to Know

canadian credit scores and flag

Your credit score is a three-digit numerical score that helps lenders, banks, and credit card companies determine your creditworthiness. It can be very difficult for Canadians to take out loans unless they have a solid credit score. So in this guide,  we’ll help you better understand the Canadian credit score range and hopefully inspire you to improve your own credit rating.

Some Background

It’s important to know that Canada has two national credit bureaus – Equifax and TransUnion. These bureaus are responsible for determining credit scores and creating credit reports.  

Different countries may have different credit scoring systems. In Canada, credit scores range from 300 to 900. Naturally, the closer you are to the lower limit, the less likely you will be approved for loans and credit cards. Even if you somehow manage to get a loan or a credit card with your low credit score, lenders will likely charge you high interest rates.

If you have a good credit score closer to the upper limit, you will find it a lot easier to get loan approvals at much lower interest rates. There are many other perks that come with having a good credit score: it can help you rent nicer apartments, get approved for insurance coverage, get better interest rates, and more. To get a better understanding of how loan interest works in Canada, you can check out Rate Genie for more info.

Now, let’s break down the different credit score levels in the Canadian credit score system:

  1. Poor – 350 to 574
  2. Below Average – 575 to 659
  3. Fair/Average – 660 to 689
  4. Good – 690 to 740
  5. Excellent – 741 to 900
canadian credit scores

Poor (350 to 574)

It’s fairly obvious that borrowers in this credit score range might have defaulted on multiple loans in the past. Their combined debt might also be very close to their overall credit limit — also known as a high credit utilization ratio. Other than this, people with such low credit scores can be those who declared bankruptcy in the last seven years.

With this credit score, you will have difficulty obtaining standard credit cards and loans. We would advise you to try improving your credit score by using a secured credit card or taking out special personal loans for people with bad credit. 

Below Average (575 to 659)

Borrowers who fall under the below-average credit range have to face higher interest rates for any line of credit they get approved for. The difference in the interest rates they have to pay versus someone who has an average credit score can be massive. They are also limited and often not eligible for bigger credit cards that provide nice rewards. 

Fair/Average (660 to 689)

People who are on the mid to lower range possibly have made many delayed payments to multiple lenders and credit companies in the past. Some of them could have defaulted on a loan at some given point. This kind of credit score would lead to slightly higher interest rates on loans (but nothing as bad as the rates given to those with sub-660 scores). The good news is you’ll be able to at least qualify for a few unsecured credit cards with this score. Since you’re skirting the boundary between fair and below-average scores, we advise you to be extra careful not to mindlessly exploit the opportunities available to you.

Good (690 to 740) 

If you fall under this credit range, then you’re likely in good financial health. Canadians who are in this credit range rarely make late payments, and their credit utilization is often very low. They are usually rewarded with low interest rates on loans and credit cards and are eligible for the most premium reward/cashback systems. However, they might still not be eligible for extra premium cards and big loans that demand unblemished credit scores. 

Excellent (740 to 900)

People who fall under this category rarely ever commit financial blunders. Their credit utilization is also the bare minimum across all lines of credit. They typically get rapid approvals for all their loan applications and credit cards. They also get credit at the lowest possible interest rates and usually enjoy the highest credit and loan limits. 

Final Words

Surprisingly enough, the median score among Canadians is 749, which means more than 50 percent of Canadians have an excellent credit score.

But even if you’re not in that range yet, the Canadian lending system is very accommodating to people who are serious about improving their credit scores over time. All it takes is some effort and discipline in becoming more responsible with your finances. Good luck!