Credit score : What You Should Know

Credit Score: What You Should Know

A Simple Breakdown of How It Works — and Why It Matters

What Is a Credit Score, and How Is It Calculated?

Your credit score is a number between 300 and 900, generated by a computer algorithm that analyzes your credit history. It helps lenders quickly group people by risk level when deciding whether to approve credit applications like loans, credit cards, or mortgages.

Each of the two major credit bureaus in Canada — TransUnion and Equifax — calculates your score using its own formula. This means that you have at least two credit scores: one from each bureau.

Depending on the size and policy of the financial institution:

• Big banks usually check both bureaus

• Smaller lenders might rely on only one

Pro Tip:

To stay in control of your credit health, open accounts with both Equifax and TransUnion. That way, you can check your reports, monitor changes, and spot any errors before applying for credit.

Credit Score Ranges in Canada

Based on the bureau’s algorithm, your score will fall between 300 (lowest) and 900 (highest).

Score Range Rating What It Means

300 – 599 Poor High risk to lenders — approval is unlikely without strong supporting factors

600 – 679 Average Approval may come with conditions or extra documentation

680 – 900 Good Considered reliable; easier approval with decent terms. Very Good Low risk borrower; may qualify for better rates and faster approval. Access to premium offers, rates, and top-tier terms

🎯 The goal is to aim for a score of 680 or higher ( learn more )— that's where mortgage lenders typically feel comfortable doing business.

Why It Matters

Your credit score tells lenders:

• How reliable you’ve been with money

• Whether you repay debts on time

• If you manage credit responsibly

• What kind of risk you pose as a borrower

It affects whether you’re:

• Approved or denied for loans and mortgages

• Offered a high or low interest rate

• Required to get a co-signer or extra documents

Final Thought

Your credit score is your financial reputation.
It’s not the only thing that matters — but it’s one of the first things lenders look at.

If your score is low or you’re not sure where you stand, don’t panic. As a certified credit counsellor, I can help you understand your report, improve your score, and prepare for future borrowing — including mortgage approval.