Did you know that the average Canadian credit score for people in their 20s and 30s is 697? Credit scores can vary quite a lot, but what is a good credit score in Canada? Why does it matter to have a good credit score and how can you increase yours if it happens to be low?
Keep reading and learn more about the entire range of credit scores in Canada and what makes a great credit score.
What Is a Good Credit Score in Canada?
The first thing you should know is that your credit score in Canada can range from 300 to 900. This, of course, is quite a large range but the majority of people fall right in the middle of it. If you manage to get a credit score that is above average, you will be able to enjoy all sorts of financial benefits.
For example, the better your credit score is, the easier it will be to get new credit cards, rent an apartment, get a loan or a mortgage, and so on. On the other hand, if you have a bad credit score, it will be much more difficult to do all of these things.
In fact, if your credit score is bad enough, banks and lenders might not even give you loans or mortgages and some apartments won’t even rent to you.
This, of course, will make your life quite a bit harder. A bad or poor credit score is one that is between 300 and 559. It is very difficult to have a solid 300 as a credit score since you would really have to be doing everything wrong financially.
To get a poor score, you would have to pay your bills and debts late, use up a lot of your available credit, and so on. Not paying your debts is a big issue and can cause your credit score to plummet. The next step up from a poor credit score is a fair credit score which ranges from 560 to 659.
This is still not a very good credit score and you will still need to spend a lot of time building credit.
With a fair score, most banks and lenders will still not be interested in lending you any money and it will not be easy to open up new credit cards. A fair score is followed by a ‘good score’ which is from 660 to 724.
Once you get into this range, you will find that you will not be as financially limited as before. Many people have scores within this range. To get and maintain a good credit score, you will need to pay back all of your bills and debts on time and you should only use a small percentage of your available credit, among other things.
It will be much easier to get credit cards, loans, and other things once you have a good credit score. However, some premium credit cards or very large loans will still be difficult to get at this range. Above a good credit score is a very good credit score which ranges from 725 to 759.
This is a bit harder to get since you will need to be much stricter with paying back your debts on time. With a very good credit score, you should be able to get whatever credit card you want and you will be free to get even larger loans or mortgages. Finally, there is an excellent credit score which is the best you can get and it ranges from 760 to 900.
You would have to never be late when paying back bills and debts. 900 is a perfect credit score and, of course, it is very difficult to get. However, if you do manage to get an excellent credit score, you will be able to enjoy the benefits of financial freedom.
But how can you get your credit score so high in the first place?
How To Improve Your Credit Score
Learning how to build credit doesn’t have to be hard, but you will have to be committed and there are certain things you need to consider. For example, the main thing is to make sure you pay off all of your debts on time. The first time you are late paying off a payment you might get a warning, but the consequences shouldn’t be severe.
However, if you keep missing payments, the consequences will only get worse and worse and it will show on your credit score. If you are always late when paying back your debts, your credit score will be in pretty bad shape. On the other hand, if you always pay back your debts on time, your credit score will steadily increase and improve.
Besides paying off your debts, you should also keep track of how much credit you’re using. Most lines of credit will only give you so much credit to use. If you use more than 30% of your available credit, your credit score will take a serious punch.
For that reason, it is best to only use a small percentage of your available credit such as less than 30% or even 25%. Once you do that, you should start to see your credit score improving.
All About Credit Scores in Canada
So, what is a good credit score in Canada? A good credit score is typically between 660 to 724.
Once you achieve this score, it will be much easier to rent apartments, open credit cards, and get loans, among other things. A score above this such as a very good or excellent score will make it even easier to open credit cards, mortgages, and so on.
To learn more about your credit score, click here.