Maintaining a good credit score is one of the keys to financial health. Without good credit, your standard of living could be compromised. You may not have immediate access to bank deposits, and renting an apartment, a car, or booking a hotel room can prove challenging.
People with the highest credit scores qualify for the lowest mortgage, loan, and credit card rates. Over many years, it adds up to thousands of dollars, money that can be used to save for important goals, such as retirement, your children’s education, or real estate investments.
In this article, I’ll review average credit scores in Canada to help you determine what a good credit score looks like. I’ll cover things like credit reports, credit utilization, and payment history, including the impact of late or missed payments on your credit health. what a good credit score looks like
I’ll also share tips to help you build good financial habits and strong credit history.
What Is the Average Credit Score in Canada?
In 2018, Equifax conducted an online generational survey of more than 1500 Canadians. And while the study is already four years old, it revealed some interesting facts about Canadian credit scores among different generations, such as:
- The average credit score for young adults (18-24) rose over a ten-year period
- All other age groups witnessed a small decline during the same 10-year period
- Millennials have increased their use of credit cards.
- 45% of millennials believed that their standard of living was worse compared to their parents.
Here were the average credit scores by age identified in Equifax’s survey:
18 to 25: 692
26 to 35: 697
36 to 45: 710
46 to 55: 718
56 to 65: 737
65 and over: 750
Borrowell is a Toronto-based company that provides Canadians with access to their Equifax credit score and reports for free via a weekly email. Borrowell has pulled statistics from their own members to calculate the average credit score for Canadians in 24 cities. Here are the results, from highest to lowest:
Markham, ON: 720
Vancouver, BC: 705
Burnaby, BC: 700
Toronto, ON: 696
Mississauga, ON: 695
Victoria, BC: 694
Ottawa, ON: 688
Montreal, QC: 687
Quebec, QC: 683
Laval, QC: 679
Kitchener, ON: 679
Surrey, BC: 675
Brampton, ON: 675
London, ON: 672
Calgary, AB: 667
Halifax, NS: 664
Gatineau, QC: 663
Winnipeg, MB: 661
Hamilton, ON: 660
Regina, SK: 659
Fredericton, NB: 658
Saskatoon, SK: 656
Edmonton, AB: 649
Moncton, NB: 640
According to Borrowell, as of 2022, the overall average credit score among their 2 million members was 672. If your credit score is over 672, you could consider it above average. But what does that mean? Is an average credit score a good score? Let’s take a closer look.
What Is Considered a Good Credit Score in Canada?
Now that we know what an average score looks like, let’s look at what constitutes a good credit score in Canada. Below is a list of credit score levels and how they are generally categorized by lenders:
- A score of 800 or above is considered excellent.
- A score between 720 and 799 is considered very good.
- Between 650 and 719, you have a good credit score.
- 600 to 649 is regarded as a fair or average credit score.
- Anything under 600 is deemed to be a poor credit score.
If your credit score is over 800, your credit score is far above the average credit score, and your credit is in great shape. You don’t have to worry about being denied credit based on your score (you may be turned down for other reasons). In addition, you’ll tend to receive the lowest available rates on everything from credit cards to mortgages to car loans.
If you fall into the 720 to 800 credit score range, you have a very good credit score – well above the average for most age ranges. You shouldn’t have trouble obtaining most types of credit, and it’s unlikely you have any recent late payments reported on your bureau.
If your credit score is between 650 and 719, it’s in the range of most of the average credit scores I covered above. Your credit is considered good but not great. Your credit score alone shouldn’t impede you from qualifying for many different credit products. If your score is at the low end of the range, there’s a good chance your credit is not well established, you have some high credit utilization or a history of minor late payments.
If your score falls between 600 and 649, your credit score is below the average in Canada. You may still qualify for credit, but not at the best rates in many cases. By taking steps to improve your credit score, you can make changes for the better.
If your credit is under 600, your credit is considered poor and is well below the average credit score in Canada. You will struggle to approve for credit with prime lenders, like the big banks and most credit unions. You may need security for credit cards, and you won’t be offered the lowest rates. If you’re forced to deal with a subprime lender, who will charge much higher rates than the average.
Who Monitors Credit Scores in Canada?
You can obtain a free copy of your credit report yearly from Equifax or TransUnion, or pay for more frequent reporting. Instead, I recommend signing up for free credit reporting with Borrowell or Credit Karma.
How Can I Check My Credit Score?
You can obtain a credit score and report weekly from Borrowell and Credit Karma. Borrowell will send you your Equifax report, while Credit Karma deals with TransUnion. Signup is free, making it a great way to stay on top of your credit. By having access to your credit report, you can identify potential errors or fraud.
Borrowell and Credit Karma make money when you sign up for credit cards and loans through their website. You’ll receive offers to apply for lenders with whom they have affiliate relationships. There is no obligation to sign up for any of these offers, I recommend using their services solely for free credit reporting.
How Can I Improve My Credit Score?
Whether your credit score is below average or just lower than you feel comfortable with, there are several steps you can take to improve your score. Consider the following and implement them as needed.
Payoff any Outstanding Collection Items
Outstanding collection items are bills that have fallen so far in arrears that the lender has sent the amount to a 3rd party collection agency to attempt to recover payment. If you have unpaid collection items showing up on your credit report, it’s unlikely that any lender will advance new credit to you until you pay them in full. Your top priority should be paying off your unpaid collections, beginning with the lowest balance (if there are multiple).
Pay Your Bills on Time
If you have lower-than-average credit, paying your monthly bills on time will help to ensure your credit score doesn’t get worse and hopefully improves. While you should always try to pay your bills by the due date, most lenders will report late payments to the credit bureau as soon as they are 30 days late.
Keep Your Credit Utilization Below 30%
If you owe money on a revolving credit product, like a credit card or line of credit, it’s important that the balance owing doesn’t exceed 30% of the available credit limit. Aside from paying excess interest, the credit bureau views high credit utilization (above 30%) as a negative, impacting your credit score negatively.
Don’t Make Excessive Credit Inquiries
Every time you apply for credit, it shows up as an inquiry on your credit report. Excessive credit inquiries in a short period, say 6-12 months, can indicate credit-seeking behaviour, serving as a caution to would-be lenders. Not only that, but credit inquiries can lower your credit score. Only apply for credit when it’s necessary.
Don’t Close Longstanding Credit Accounts
This might seem counterintuitive, but your credit score could drop if you close a credit account that’s been active for several years, like a credit card. That’s because the credit bureau uses the length of credit history as a determining factor for your credit score.
Closing an old account could shorten your credit history and lower your score. That doesn’t mean that you shouldn’t close a credit product that you’re not using – but I wouldn’t recommend doing so if you plan to apply for credit in the near future.
How Important Is Average Credit Score?
When it all boils down, knowing the average Canadian credit score doesn’t matter all that much – it’s simply another way to gauge where your own score is at.
On the other hand, good credit and understanding the difference between credit and debt is very important. Remember that if your credit score is not where you want it to be, there are steps you can take to improve it.