What’s the average credit rating in Canada?

Your credit rating in Canada is a number between 300 and 900, which represents everything on your credit report. Your score is created by a computer program that reviews what is on your credit report and converts all that information into a score. To see where you stand, you can compare your credit score against the average credit rating in Canada.

The average credit rating in Canada is around 650 according to both credit bureaus, and this varies from province to province. Once you have increased your credit score to 650 or higher, you'll be able to qualify for more financial products. A credit score below 650 is going to make it hard to qualify for new credit, also anything you are approved for will likely come with very high-interest rates. 

Do you know your current credit score? If not, check your free instant credit score with Refresh Financial. 

What determines your credit rating in Canada? 

Here’s a quick summary of how credit works in Canada: 

 1. Payment history makes up 35% of your score. Paying your bills on time and in full will boost your credit rating. Anything other than this will negatively affect your score.

 2. The credit utilization ratio makes up 30% of your score. Credit usage percentage is the total amount of credit you have to your name versus how much of it you have used. For the best impact on your credit rating, bring your credit usage below 30-35%. 

 3. The length of credit makes up 15% of your score. If you've been making steady payments (on-time and in-full) towards a loan for several years, it indicates that you are a responsible borrower, and your score will reflect that. This is a good reason why you should start building credit as soon as possible, even if you're a student or going through a bankruptcy/consumer proposal. 

 4. Various different types of credit products make up 10% of your score. Credit cards are revolving credit. You want both a revolving trade line as well as an installment line, such as a loan with a fixed repayment amount each month. Having a variety of credit products will have the biggest impact on your score.

 5. Credit inquiries make up 10% of your score. Every time someone does a 'hard check' on your credit, your score takes a hit as it can look like you're desperate to find a source of credit. Limit your hard inquiries, particularly if you have been declined. Hard credit inquiries include: 

• Cash loans 
• Credit cards 
• Cell phones 
• Electricity bills 
• Car loans

What is a “good” credit rating in Canada? 

To have a good credit rating in Canada you want to aim for a credit score above 700. Even though “good” technically starts at 660, getting your credit score above 700 is going to open up many new options for you. If you have a good credit rating in Canada, you have access to far better interest rates across all financial products – saving you thousands in the long run. Even more, you get a better chance of getting approved for credit products that you really want. 

Understanding credit score ranges in Canada 

The range of credit scores you can have in Canada is between 300 and 900, the higher the better. Here’s a quick breakdown of what each credit score range means: 

Excellent credit (760-900) 

If your credit score falls within the excellent range, the world is pretty much your oyster. You are guaranteed approval for any financing you apply for when your income supports the payments. You’re also going to be offered the best interest rates and be able to save cash on your borrowed money. 

Good credit (725-759) 

If your credit score is good, you’re still going to get decent interest rates, but it’s worth it to spend a short period of time working your way up to excellent credit - just to be able to unlock even better interest rates. The few months of being patient and disciplined could save you thousands of dollars. 

Average credit (660-724) 

Similar to a good score, you’re probably going to get approved for credit you apply for and you might get some okay interest rates, but it wouldn’t take you that long or very much pain to get up there to a better score. Take the time to build your score from here, then apply for credit.

Poor credit (560-659) 

You likely won’t be approved for much, outside of secured credit products with scores in this range. Interest rates you’re offered will be high. 

Very Poor credit (300-559) 

Similar to the poor range, your score is going to deny you any product or limit you to secured credit products with very high-interest rates. 

4 ways to build your credit rating in Canada 

If you’re on the lower end of the credit score spectrum, the good news is that your situation is reversible. Even those who have been through a bankruptcy or consumer proposal can recover and can do it quicker than you might realize. Take a look at the Refresh Credit Builder Program for options. 

1. Check and understand credit reports and scores 

There are two credit bureaus in Canada – Equifax and TransUnion. All your financial activities are listed in these reports. For example, if you open a bank account or apply for a credit card, this is listed in your credit report. Lenders go to the two credit bureaus and check your report before deciding to give you credit. 

2. Keep a low credit card balance 

The rule of thumb is to keep your credit to less than 30% of your available limit. Making consistent payments on your credit card month after month - ensuring not to max out your card - will help boost your credit rating. 

3. Get a secured card 

One of the easiest ways to build or rebuild your credit is by opening a secured card account. A secured card is the perfect solution if you are working on building your credit or you are having a hard time getting a credit card. With a secured card, you are required to put a security deposit on your card, and this is the maximum credit that’s available for you to use. A secured card helps you spend money responsibly while building your credit score. 

Apply today!

4. Monitor your credit score 

Your credit score gives you a picture of the overall health of your credit. You can get your free credit score from the two credit bureaus in Canada. Another quick way to get your credit score checked is through Refresh's credit score checker. 

 You now have all the information you need about credit scores in Canada. You’re even more equipped and confident to start improving your credit and unlocking access to financial products at better interest rates. 

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Refresh financial offers custom credit building solutions to help you build your credit score FAST.