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What is a credit score?

Region: Ontario Answer Number: 0284

A credit score is a three-digit number calculated using a formula based on the information in your credit report. A credit score is different from a credit report. A credit report is a file kept by credit reporting agencies that contains information on a person’s credit history. Credit reports also contain credit ratings, which are codes that lenders use to rate how and when you make payments. Each separate credit account you have will have a credit rating.

Credit scores

In Canada, credit scores range from 300 to 900 points, with 900 being the best score.

Lenders generally rate your credit score as follows:

  • 760-900 = Outstanding
  • 725-759 = Very Good
  • 660 – 724 = Good
  • 560 – 659 = Average
  • 300 – 559 = Poor

Credit scores may be used if you are applying for a personal loan, a car loan, a credit card, a mortgage and even when applying to rent an apartment. A higher credit score will improve your chances of being approved, while a lower credit score can either decrease your chances, or you could be charged a higher interest rate.

Although each lender sets its own guidelines regarding the minimum credit score you need for them to loan you money, generally, a credit score above 650 will be enough for you to qualify for a standard loan.

What factors impact your credit score?

Each credit agency calculates your credit score differently. Common factors include:

  • what types of credit you have
  • whether you have a balance on your credit cards
  • how long you have had credit
  • the amount of your outstanding debts
  • how close you are to your credit limit
  • how often you apply for additional credit

What will damage your credit score?

Your credit score will decrease for activity that shows you have difficulty managing credit, such as:

  • a history of making late payments,
  • having your account sent to a collection agency,
  • too many recent hard inquiries (for example, applying for a lot of credit cards in a short amount of time may indicate that you are having financial difficulties ), or
  • an insolvency or bankruptcy.

Improve your credit score?

You can improve your credit score in a number of ways, including:

  • making all your payments on time,
  • checking your credit report and correcting any errors (you can order your credit report for free once a year from Equifax and TransUnion; you can also request your credit score, although you may need to pay a fee), and
  • if you have no credit history, by opening a secured credit card account, using it, and paying off your balance each month.

When deciding if you are a good risk for a loan, lenders will also consider other factors along with your credit score, such as your income, type of employment and assets.

For more information regarding credit reports and credit scores, visit

A criminal record will affect your ability to get a loan, a mortgage, or a job. To erase your criminal record, call toll-free 1-800-874-2652 or learn more at Parole Board of Canada. It’s easier than you think.

There are many options to consider when you are in a situation of financial difficulty. For easy-to-understand debt solutions on your terms, contact our preferred experts 4Pillars and rebuild your financial future. With 60 locations across Canada, they will help you design a debt repayment plan and guide you with compassionate advice. No judgment. For help, visit 4Pillars or call toll-free 1-844-888-0442 .

4Pillars Credit & Debt All Provinces All Topics March 19, 20184Pillars Credit & Debt All Provinces All Topics March 19, 2018

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