Understanding the average Canadian credit score is essential for anyone looking to make informed decisions about their financial future. A good credit score can affect your ability to secure loans, obtain favourable interest rates, and even influence employment and housing opportunities. In this article, we will delve into the average Canadian credit score, the factors that affect it, and what a good credit score looks like. We will also discuss how Canadians can improve their credit scores and the importance of maintaining good credit. By the end of this article, you will have a clear understanding of where you stand in comparison to the average Canadian and how to work towards improving your financial health.
What is a Credit Score?
A credit score is a three-digit number that gives a glimpse into a person's financial trustworthiness based on their credit history. In Canada, credit scores range from 300 to 900, with showing an increasingly lower risk for lenders. Credit scores help lenders, landlords, and employers make wise decisions about an individual's financial character and potential for regular payments and financial soundness.
How are Credit Scores Calculated?
Credit scores are calculated using a variety of factors from your credit report, including:
Payment history: Timely repayments on loans and credit cards account for approximately 35% of your credit score.
Credit utilization: The amount of credit you're using compared to your available credit limits accounts for roughly 30% of your score.
Length of credit history: The age of your oldest and newest accounts, as well as the average age of all your accounts, contributes to approximately 15% of your score.
Types of credit: A mix of various credit types, such as mortgages, auto loans, and credit cards, accounts for around 10% of your score.
Recent credit inquiries: Hard inquiries, which occur when you apply for new credit, make up about 10% of your credit score.
What’s Credit History?
Credit history is a record of your past financial behavior, including loan and credit card repayments, outstanding debts, and any bankruptcies or collections. Lenders use this information to evaluate your creditworthiness and determine the likelihood of you repaying future loans. A positive credit history, marked by consistent, on-time payments and responsible credit use, can contribute to a higher credit score.
Average Credit Score in Canada
The average credit score in Canada is around 680, which is deemed as "good" on the credit score scale. Everyone's scores can range widely based on their age, income, and spending habits, so it's essential to note that this average doesn't necessarily apply to every person. While the benchmark benchmark offers a guideline, it's still important to take into account any individual financial factors that could significantly affect your score.
How to Build Credit
Improving your credit score is a crucial aspect of maintaining good financial health. Here are some strategies to help build and maintain a strong credit score:
Make timely payments: Consistently paying your bills on time is one of the most significant factors in determining your credit score.
Keep credit utilization low: Aim to use no more than 30% of your available credit limit to maintain a healthy credit utilization rate.
Maintain a mix of credit types: Diversify your credit portfolio by having a combination of installment loans (e.g., auto loans or mortgages) and revolving credit (e.g., credit cards).
Limit hard inquiries: Only apply for new credit when necessary, as each hard inquiry can temporarily lower your credit score.
Monitor your credit report: Regularly review your credit report for errors or inaccuracies and dispute any incorrect information to ensure your score accurately reflects your credit history.
In conclusion, understanding the average Canadian credit score and the factors that influence it is key to unlocking a healthier financial future. With responsible financial habits and a commitment to building and maintaining a good credit score, you can open the door to a more prosperous life and reap the rewards of having an impressive credit rating.
FAQs
According to the Fair Isaac Corporation (FICO) blog, the average Canadian FICO score remains at 762. Meanwhile, in its 2022 report, Borrowell states that the average credit score of over 2 million of its Canadian members is 672, compared to 667 in 2021.
What is the average Canadian credit score? ›
The average credit score in Canada is around 680, which is deemed as "good" on the credit score scale. Everyone's scores can range widely based on their age, income, and spending habits, so it's essential to note that this average doesn't necessarily apply to every person.
Does anyone have a 900 credit score in Canada? ›
While it's technically possible to have a credit score of 900 in Canada, a 900 is relatively rare and most Canadians will have credit scores that fall within the Fair range.
What percentage of Canadians have an 800 credit score? ›
In fact, membership to the 800 Credit Score Club is so exclusive that roughly less than 1 in 6 people have scores high enough to qualify. At the time of writing, that means 5.268 million Canadians over age 18 might qualify.
What is the range of a FICO score in Canada? ›
A FICO score is a 3-digit number that ranges from 300 up to 900 and is derived from five main factors: your payment history, credit utilization, account history, public records (or credit mix) and credit inquiries.
How many people have an 800 credit score? ›
22% of U.S. Consumers Have Exceptional Credit
| Percentage of Consumers by FICO® Score 8 Range | |
|---|
| Range | Percentage of Consumers |
|---|
| Good (670-739) | 21.6% |
| Very good (740-799) | 28.1% |
| Exceptional (800-850) | 21.9% |
2 more rowsApr 17, 2024
A credit score of 900 is not possible, but older scoring models that are no longer used once went up to 900 or higher. The highest possible credit score you can get now is 850.
What is a good credit score to buy a house in Canada? ›
While it will vary by lender and type of mortgage, in general, the minimum credit score to be approved for a traditional mortgage is around 680. Some lenders may go a little lower, but again, higher is better. A credit score above 700 is considered optimal when applying for a mortgage.
What is the highest credit score possible in Canada? ›
In Canada, credit scores range from 300 to 900, 900 being a perfect score and 300 the lowest.
What's the highest credit score in the USA? ›
Read on to learn more. Generally speaking, the highest credit score possible is 850, according to the most common FICO and VantageScore credit models. There are several factors that go into determining a credit score, such as payment history, amounts owed, length of credit history, credit inquiries and credit mix.
A score below 560 is generally considered to be a bad credit score in Canada, according to credit bureau Equifax. A score between 560 and 659 is often considered fair, while scores between 660 and 724 are considered to be an acceptable or good credit score.
Can I buy a house with an 800 credit score? ›
In fact, with an 800, you ought to qualify for some of the best interest rates and terms available. FHA loans: First-time homebuyers and those looking for a mortgage with a low down payment often look to a loan from the Federal Housing Administration.
What is a good credit score to buy a house? ›
You'll typically need a credit score of 620 to finance a home purchase. However, some lenders may offer mortgage loans to borrowers with scores as low as 500. Whether you qualify for a specific loan type also depends on personal factors like your debt-to-income ratio (DTI), loan-to-value ratio (LTV) and income.
What is the average credit score in the United States? ›
The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850. The higher your score, the better.
What is the average credit score in Canada by age? ›
Average Credit Score in Canada by Age
| Age Range | Average Credit Score | Credit Range |
|---|
| 18-25 | 692 | Fair |
| 26-35 | 697 | Fair |
| 36-45 | 710 | Fair |
| 46-55 | 718 | Fair |
2 more rowsDec 29, 2023
In Canada, according to Equifax, a good credit score is usually between 660 to 724. If your credit score is between 725 to 759 it's likely to be considered very good. A credit score of 760 and above is generally considered to be an excellent credit score. The credit score range is anywhere between 300 to 900.
Is 600 a bad credit score Canada? ›
According to Equifax, a major credit reporting agency in Canada, the credit scores ranges are as follows: 300-579: Poor. 580-669: Fair. 670-739: Good.
Is 700 a bad credit score Canada? ›
Focus on improving your credit score, and with time and effort, you'll build it up and open new financial opportunities. So, as you see, a 700 credit score falls within the range of good. You'll be happy to know that your score is also higher than the average Canadians which, according to TransUnion, is 650.
Is a 620 credit score bad in Canada? ›
Traditionally, a poor credit score is between 300 and 560, with fair credit sitting in the 560 to 660 range. A good credit score in Canada is between 660 and 725, and very good is between 725 and 760.
Is 580 a good credit score in Canada? ›
According to Equifax Canada, one of the country's two major credit bureaus (organizations that issue credit scores), a 580 credit score falls within the “fair” range.
