How to improve your Credit Score in Canada

Are you struggling to increase your credit score? Then this post is for you! Learn how a credit score in Canada is calculated and how you can increase your credit score.

What is a credit score?

A credit score is a number from 300 to 900 representing your creditworthiness. Banks, lenders, & landlords will use this number to determine how likely you are to pay back your outstanding debts.

Your credit score changes very frequently, usually just by a few points. Lenders can interpret the results using their criteria for what they will ultimately lend to you. Lenders will also consider additional factors such as salary, additional debts, and bank statements to get an overall picture of your financial health.

Credit score rankings

Credit scores range from poor to excellent based on your 0 to 900 score. See below for how Equifax (a Canadian credit bureau) gives you a credit ranking.

  • Poor – 0 to 550
  • Fair – 550 to 660
  • Good – 660 – 724
  • Very good – 725 – 759
  • Excellent – 760+
custom graph of credit score ranks

A good credit score is considered 660 points and above. The Government of Canada shows that the average Canadian credit score is between 650 to 725. Unfortunately, if your score is below 660 financial institutions are less likely to give you an unsecured loan. The higher your credit ranking, the easier it is to qualify for a car loan, or personal loan and at a lower interest rate. If you have fair or poor credit, you can still qualify for a secured credit card and secured loans.

How your credit score is calculated

Canadian credit scores are calculated based on the following criteria listed out below from highest to lowest impact:

  • Payment History (35% of total) – Based on making your payments in full by the due date
  • Credit Utilization (30% of total) – Based on how much of your total available credit you are using
  • Credit History (15% of total) – Based on how long you have been utilizing credit
  • Diversity of Credit (10% of total) – Based on how many different types of credit you have (credit cards, lines of credit, etc)
  • Credit Inquiries (10% of total) – Based on how many times you have applied for new lines of credit. When your credit is pulled but you do not apply for credit, this is called a soft credit check and it does not impact your credit score
Credit score breakdown by Category

Tips for increasing your credit score

Below is a list of the tips I utilize to increase my credit score:

  • Always pay all of your bills in full and by the due date. As long as you always do this, you will have the largest impact on your payment history, which is the largest driver impacting your credit score
  • Utilize less than 30% of your total credit available. This will give you the highest score in the credit utilization category
  • Home Equity Lines of Credit (HELOC) are included in your available credit for your credit utilization total but mortgages are not. Consolidating your HELOC debt into a mortgage can improve your credit utilization.
  • Open your first credit card as young as possible. As a result of this, you will start building your credit history and begin building your credit score. It also reduces your expenses by leveraging points you can earn on credit cards.
  • Open multiple credit card accounts & Lines of credit to build your diversity of credit
  • Don’t open different lines of credit too quickly. This will lower your credit inquiries component. However, this will only impact your score temporarily and will recover in a few months
  • Do free credit score checks regularly. Companies like credit karma and Borrowell make it quick, easy, and convenient to get free credit scores. For full credit reports, you would go to credit bureaus like Equifax and Transunion. These are the 2 largest Canadian credit bureaus.


Improving your credit score can give you access to more credit at better rates. This opens up opportunities to buy real estate, qualify for loans and increase your overall financial health. By leveraging the advice in this article you are well on your way to improving your credit score. Additionally, having a higher credit score will allow you to qualify for buy now pay later financial services offered by Klarna Canda.

Click here to learn more about personal finance in Canada

Nick Robert

About the Author

Nick Robert is the founder and creator of I created this website to educate Canadians about everything related to personal finance. As a Chartered Professional Accountant & Chartered Accountant, I have worked with many Canadians to achieve their personal finance goals.

To contact me, you can visit my contact page to email me directly, or you can visit and participate in my subreddit. Let me know about any topics you would like me to cover. If you are interested in guest posting on this website, message me through the contact page.

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