Understanding what your credit score means and how to improve it

Your credit score is an indication of your creditworthiness. When applying for secured or unsecured credit, potential lenders will look at your credit score to determine if you are a credit-worthy application.

They may use your credit score (and your credit rating) as a means of determining how much credit they can grant you.

Equifax is one of Canada’s main consumer credit bureau reporting agencies. It is a primary source where potential secured and unsecured lenders will conduct their search for data on the boring and repayment history of individuals.

According to Equifax, credit scores range from 300 to 900 points with a rating of 900 being the best score. As your credit report at the credit bureau is updated by your lenders based on debt repayment, your credit score will change over time.

The higher your credit score, the easier it may be to negotiate and obtain lower interest rates for vehicle loans, personal loans, residential mortgages, and credit cards from banks, credit unions, and other lenders such as vehicle financing or vehicle leasing companies.

Equifax credit score ranges

• Excellent: 760-900
• Very good: 725-759
• Good: 660-724
• Fair: 560-659
• Poor: 300-559

Credit ratings

Credit ratings range from 0-9, with 1 being the best rating. If you have an R1 rating, it means that you have been paying your debts on time and within 30 days of the statement due date.

0 – Too new to rate
1 – Paid within 30 days of billing
2 – Payment made 30 days late
3 – Payment made 60 days late
4 – Payment 90 days late
5 – Payment made 120 days late
6 – Rating not used
7 – Making payments under Consumer Proposal or credit counselling debt management program
8 – Repossession
9 – Written off as “bad debt”, sent to collections, or Bankruptcy

How to improve your credit score

To improve your credit score and avoid your credit rating from being negatively affected, it’s important that you:

• Avoid missing bill payments
• Pay your outstanding bills on time/ in advance of the statement due date
• Pay at least the required minimum statement balance (more is better)
• Stay within your credit limit
• Avoid closing open accounts that are inactive
• Ensure that the information reported on your credit file at the credit bureau is accurate

Credit bureau contact information

To review your Canadian credit rating and credit score, you can obtain a copy of your credit report by contacting Equifax Canada at 1-800-465-7166 or Equifax.ca.

TransUnion is another primary Canadian consumer credit bureau reporting agency. You can obtain a copy of your credit report by contacting TransUnion at 1-800-663-9980 or transunion.ca.