Having a high credit score is important for Canadians that plan on borrowing a large amount of money in the future. A higher score provides you with more favorable lending rates with a bank. Even a difference of 0.5% can make a big change when you’re looking at large loans like mortgages.

A few points on your credit score can mean the difference between getting approved for a loan at a reasonable interest rate and being denied a loan altogether. If you’ve missed some payments or had to file for bankruptcy, you’ll have to focus on building your score back up. Ideally, you’ll want a credit score of 700 or higher. Along with some information from the Government of Canada’s website, we’ve written this blog to help you achieve this.



Let’s start with the basics. At the very least, you should try to keep your credit card balance well below the limit. If your cards are almost maxed out, it suggests you’re overextended and more likely to be late on a payment.

If you want to increase your credit score, the Financial Consumer Agency of Canada recommends you don’t spend any more than 35% of your credit limit. (This is called your credit utilization ratio.) Doing so will increase your score as you pay your card on time every month.

For example, if you have a $10,000 limit on a credit card you wouldn’t want to carry a balance any higher than $3,500 if you’re looking to improve your score. If you use a lot of your available credit, lenders see you as a greater risk. This is true even if you pay your balance in full by the due date.



We really want to emphasize this. Paying off your debts on schedule is one of the most effective ways to raise your score. If you’ve missed some bills and your score hovers around 600, it will likely take a year of good credit behavior to boost it to an optimal 700. A score of 500, indicating bankruptcy, could take you roughly 1-3 years to repair.



If you are considering a bank loan of some sort, you may want to check your credit score six months to a year in advance. This will ensure there are no surprises or errors. Also, increasing your score can take some time, so you want to plan ahead in case you’d like to bump it up a bit before applying.

Canada has two major credit reporting agencies you can check your score with; Equifax and TransUnion.



If you have little or no track record of borrowing money and paying it back, chances are you’ve got a low credit score because lenders have nothing to gauge your credit worthiness against. If you have a credit card but never use it, you may want to consider making occasional purchases and paying them off to help increase your credit score over time.

How fast you’re able to increase your credit score depends on why it’s the number that it currently is. For instance, if you’re just starting to build credit after not having any at all, you can raise your credit score rather quickly by just using credit and making payments on time and in full every month.


Increasing your credit score takes time. If you’re looking to improve it, you’re already off to a good start with the right mindset. As you pay off debt, stay on top of your bills, and build your savings, you’ll help improve your credit score and improve your financial wellbeing.


Source: Financial Consumer Agency of Canada