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How Are Credit Scores Calculated in Canada?

To the point How is the credit score calculated in Canada by Equifax and Transunion? Here are some details and our tips on credit score and credit report.

Many people believe that frequent credit card applications hurt their credit scores. This is a myth.

The truth is that credit card applications are not the only element that makes up your score.

By setting short- and medium-term goals, let’s see how to improve your credit score to get the best credit card offers in Canada!

Components of the credit score

The credit score intrigues a lot of people. Indeed, there is not much information on the subject and it remains rather vague for the majority. Below is how the credit score works. If you prefer to watch our video, here it is:

Credit score - Punctuality (35%)

35% of your credit score comes from your payment history to pay your balances on time. It will tell lenders if you are a good borrower or not.

If you want to increase your credit score, pay each of your credit card balances in advance without waiting for the credit card statement.

Credit score - Use (30%)

30% of your credit score comes from your monthly credit utilization granted by different lenders (mortgage, line of credit, credit cards, etc.)


  • Monthly, you use $2,500 of your available credit, consisting of a single credit card with a $5,000 credit limit. Your credit utilization rate is 50%.
  • Now, you have two credit cards with a $5,000 credit limit on each, and you still use $2,500 of your total credit limit. Your credit utilization rate will drop to 25%.

We recommend you to keep a credit utilization rate of less than 30%.

Credit score - History (15%)

15% of your credit score comes from your credit history in Canada for all your credit lines (credit cards, mortgage, auto loans, student loans, etc.).

An average is calculated to establish this score. Thus, it is recommended to keep an “old” credit card active in order to maintain a good average.

Credit score - Types of credit (10%)

10% of your credit score comes from a credit diversification (mortgage, line of credit, credit cards, etc.)

Lenders are reassured when you demonstrate the strict management of your finances. The more different types of credit you have (properly repaid each month), the better your credit score will be.

Credit score - New applications (10%)

10% of your credit score comes from your new credit inquiries (credit cards, loans, etc.). Each time you make a credit inquiry, your credit score will be affected, and a few points will be lost.

These points are usually recovered in a few months if you follow the above guidelines (including punctuality and credit utilization rate).

Credit score - Building a credit file

If you are starting in the hunt for points and miles, and your credit file is very recent, we advise you to start with a no-annual-fee credit card and keep it as long as possible. There are more than ten different cards available.

Keeping a credit card for many years allows you to maintain a good credit history (i.e. 15% of your credit score).

Here are several credit cards with no annual fee, from different institutions, with a view to keeping it year after year for credit history:

Credit score - Credit agencies' choice of issuers

You can check your credit report with the two major credit bureaus. Here are our two posts about it:

Each of these institutions offers its own score: don’t try to compare them. It will always be different. Typically, Equifax will score lower than Transunion. This means that the recipes for calculating your score are different!

Be aware that credit card issuers will check your credit report from one of these bureaus at the time of your application. Afterwards, your new account will be reported to both bureaus.

Equifax Transunion
National Bank American Express
President’s Choice Scotiabank
CIBC Canadian Tire
Desjardins MBNA
TD Rogers

American Express and MBNA can check both bureaus, although they generally go for Transunion.

equifax sommaire score

Credit score - Improving your credit score

Here are some tips to get a good credit score or improve it:

  • Stay away from your credit card limits(30% of your credit score)
  • Pay your balances on time (35% of your credit score!)
  • Frequently pay your balance before the credit card statement to boost your credit score
  • Keep credit lines opened for as long as possible (thanks to a no annual fee credit card you keep year after year / 15% of your credit score)
  • Do not request new cards before a mortgage appointment
  • Do not apply for unnecessary credit cards (especially department store cards or the one with no real advantage for you, etc.)
Our tips

For details on all these tips, read this complete post.

Credit score - Repair your credit file

You can transfer your credit card balances to some specific credit cards, but you have to meet your new deadlines scrupulously!

Examples include credit cards offering a balance transfer with a zero or reduced interest rate.

Frequently asked questions about the credit score

What is the credit score and what is it used for?

When applying for a credit card, the card issuer will check your credit report and review your credit score, representing your current financial situation.

Two institutions will provide this information: Equifax and Transunion. After opening an account with one of the two, you will be able to consult your score, which can be between 300 and 900.

A credit history will compile information such as:

  • your current credit (mortgage, car loans…)
  • your employment history
  • your debts (such as late payments, bounced cheques, accounts transferred to a collection agency, judgments, bankruptcies, etc.)

It is important to know that a credit card application will only count for 10% of your credit score.

To conclude, credit card issuers want to know:

  • whether you’re a good or bad customer
  • if you have debts
  • if other institutions have (successfully) granted you credit

How Are Credit Scores Calculated in Canada?

  • 35% of your credit score comes from your payment history when you pay your balances on time.
  • 30% of your credit score comes from your monthly use of your various credit lines granted by different lenders (mortgage, line of credit, credit cards, etc.).
  • 15% of your credit score comes from your credit history in Canada for all your credit lines (credit cards, mortgages, car loans, student loans, etc.).
  • 10% of your credit score comes from diversification in your credit types (mortgage, credit card, credit card, etc.).
  • 10% of your credit score comes from your new credit applications (cards, loans, etc.)

How good is my credit score?

There are two credit scoring agencies in Canada: TransUnion and Equifax.

It is possible to open an account with each of them to get your credit score. However, this will differ depending on the institution.

The scale for assessing your score for TransUnion is as follows:

  • 300-599 Very low
  • 600-699 Low
  • 700-749 Fair
  • 750-800 Good
  • 801-900 Very Good

The scale for evaluating your score for Equifax is as follows:

  • 300-559 Low
  • 560-659 Medium
  • 660-724 Good
  • 725-759 Very good
  • 760-900 Excellent

We, therefore, advise you to always stay above 700.

Come to discuss that topic in our Facebook Group!
Jean-Maximilien is an expert in Canada and France about Loyalty programs, Credit cards and Travel. He is the Founding President of Milesopedia.

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