In Canada, our credit score plays a key role in all of our major financial decisions; whether you are applying for a loan, wanting to rent an apartment, or applying for a job, your credit score says a lot about how you handle money.

We will explore how credit scores work in Canada, what you can do to improve your credit score, and what to do should you find yourself in a situation where your score is less than ideal. Don’t worry, though; we are not going to bore you with overly technical terms, just actionable information that will make your life easier.

Why do we even care about credit scores

A generation ago, your local bank or credit union was the only option whenever you wanted to borrow money. The manager or loan officer would base their decision solely on how well they knew you as a person. If you had a great relationship with the manager, even if your finances were in shambles, your odds of getting the loan approved was better than 50/50.

Flash forward to modern-day life. We no longer live in small communities where everyone knows everyone. So the only effective tool that creditors have to determine whether to offer someone a loan is by looking at their credit score.

What you need to know about credit scoring models

A credit score is a three-digit representation of how likely you are to keep your financial commitments. Different scoring models are used, and each lender will set its own unique parameters. This is why it can be difficult to say what is “good” credit versus “great” credit.

Next, you need to know that there are really two credit bureaus that store, update, and release your official credit score in Canada: Equifax and TransUnion. Since Equifax and TransUnion use different scoring models, you could have different credit scores depending on which credit reporting agency is used. Canadian lenders will work with these agencies and develop their own scorecard, which gives preference to certain qualities and penalizes others. The scorecards that lenders use are a closely kept secret.

Where does your credit score rank compared to other Canadians

There is a hierarchy of scores. The closer you are to 900, the more creditworthy you are. Here is the breakdown:

  • 300-600 is in the poor or subprime category; you will have a very difficult time getting approved for most credit cards and/or lines of credit. Interest rates on car loans will also be quite high.
  • 601-650 is considered fair, you are still below the median credit score of 660 in Canada, but you will be able to qualify for store credit cards.
  • 651-700 is considered good as your score is comparable to most other Canadians, your chances of being approved for bank credit cards and other financial products are quite high.
  • 701-750 is very good credit; you will receive preferential interest rates and offers from all major lenders.
  • 751-900 is classified as excellent; you are in a class by yourself and will have no issues getting the best credit terms.

After reviewing this ranking system, you will be able to see where you compare to the rest of Canada. A wonderful thing about credit scores is they are fluid. Should your score be on the lower end of the spectrum, by following some best practices that we will discuss in a little bit, you can turn things around quickly.

Important things to know about credit scoring

The age of your credit accounts and repayment history will heavily influence your credit score. Credit reports can go back seven (7) years, so the longer you have an account open in good standing, the more impact it will have on your credit score.

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Using a joint account to give your credit score a shot in the arm

One tactic you can use to improve your credit score dramatically is to have someone with perfect or near-perfect credit add you as a joint account holder. This is not a viable option for everyone because you need to know someone with impeccable credit willing to put you on their account as a joint holder. The benefit of being the joint holder is you get credit, pun unintended, for the account even though someone else did all of the heavy lifting. This is not the end all be all with credit scoring, but if you have access to someone with an excellent credit profile, you could benefit tremendously from this little-known tactic.

Which credit reporting agency is better?

This is a difficult question because there is no real way to gauge which company is superior. They both offer business and consumer credit products, and lenders tend to use both agencies before making any lending decision. Both Equifax and TransUnion have good deals on credit monitoring.

Importance of keeping track of your credit report

We touched on why credit scores are important and Canada's different credit reporting agencies. Now we are going to shift gears. These are things you can do to improve your credit score and save money simultaneously.

You can order free copies of your credit report from TransUnion and Equifax. There is no cost to access these reports and your credit score. ClearScope, banks and some other companies also make your credit score available to you for free. However, this next step is very important, so please pay close attention.

When you receive the credit reports, go through each one line by line. If there are any mistakes, you need to document them right away, write down the mistake, and keep it. Then, we are going to show you how to have those mistakes addressed.After you have gone through every line on one credit report, repeat this step with the other and note any mistakes, even if they may seem trivial.

How to dispute inaccurate information found inside your credit report

If you recall, we asked you to note all the mistakes you found inside your credit report. The law requires these agencies to correct any legitimate mistakes that are found inside your report. It is your responsibility to inform the agency.

Equifax’s credit dispute process is fairly straightforward to follow. You will need to provide comprehensive details about the error. It is unlikely that both credit reporting agencies would have identical errors. TransUnion has a section of their website dedicated to disputing errors in your credit report.

Documenting all of your interactions with the respective credit reporting agencies is necessary. The majority of the time, everything goes smoothly, but it helps to have a communication paper trail in case there are any misunderstandings. You should begin this dispute process as soon as possible; it could take 30 days or longer before the corrections are implemented and another month after that for your credit score to adjust.

Why go through all the trouble? If you plan on applying for credit, those errors will be there and affect your score. In that case, this could make or break the deal, so be sure to begin the dispute process right away.

Improve your credit score right away

Now that you know how to dispute inaccurate details inside your credit report, we can shift your focus on the things you can work on today, the things that will improve your credit score. It isn't hard to do. It just takes time.

Improve your credit score with a good mix of credit products

Scoring models look at a variety of different variables. One thing that impacts your score is your mix of credit products. For example, if you have just one credit card with a low credit limit, you face an uphill battle trying to improve your credit score.

You should consider applying for a few different credit cards that are great for building your credit. When you apply for new credit cards, try to space out the applications. You don't want too many inquiries hitting your report at the same time. These are all hard credit checks and they negatively affect your score.

If your credit score is not high enough, you might consider applying for a secured credit card. This helps you build your credit history. A secured card is not to be confused with a prepaid credit card, which will not help you improve your credit score.

Improving your credit score through credit building services

We touched on some of the ways you can rebuild your credit, but you don’t have to do it all on your own. There are a few companies that have some remarkable credit rebuilding tools. We are going to review each of them in no particular order. They are all worth serious consideration.

KOHO’s credit-building subscription

KOHO offers an app that can help you keep tabs on your finances. Budgeting is very important when rebuilding your credit. If you do not have a good budget in place, you could spend more than you can afford.

KOHO also has a credit-building product that can help you improve your credit score. Every month you will pay KOHO $7  for a term of 6 months. Each month, you make the payment on time; KOHO reports this to both TransUnion and Equifax. This credit rebuilding loan helps raise your credit score for a number of reasons.

  • It adds a new tradeline to your mix of credit products. Having a mix of revolving and fixed credit products is highly recommended
  • It provides a positive repayment history, which dramatically impacts your credit score.

Refresh Financial’s secured credit card

Next on our list of credit rebuilding companies is Refresh Financial. Refresh has some powerful tools that can help you on your path to rebuilding your credit score. It is a secured credit card.

Refresh's secured credit card is a Visa card with a limit that ranges from $200 up to $10,000. You would need to deposit money into the card, so if you deposited $1,000, then your credit limit would be $1,000. The fees for using this card are nominal. This card works just like a conventional credit card; you will receive an invoice every month and need to pay it by the due date. By using this card and paying it as agreed, your credit score will begin to improve.

Refresh has its own unique credit rebuilding loan. The term for this loan ranges from 12 to 36 months, depending on the term you want. These loans range from $1,250 all the way up to $10,000. Every month you would make payments for a predetermined amount, and at the end of the term, you would get your original investment back less interest and fees.


MyMarble is another excellent credit rebuilding tool that to consider. It is perfectly natural to feel some anxiety when trying to improve your credit. Most of us are not experts in this area!

When you sign up with MyMarble, there are three main categories: MyBudget, MyCredit, and MyDebt. It asks you a series of questions to better understand you as a person and your approach to money. The application makes you set some goals and provides you with expert advice to help you achieve them.

Something that truly makes this service unique is the sense of community. You will be able to communicate with thousands of other members in chat groups about finances. Knowing that you are not alone, that there are other people who are in a similar situation to you can make all the difference.

Benefits of using credit repair consultants

Most of us are not familiar with the inner workings of Equifax and TransUnion and the laws that govern them. However, a little-known secret to credit rebuilding is to seek out the help of professional credit repair consultants. Yes, not an app, but a person.

These individuals are fully versed in the laws that these credit reporting agencies must abide by. With your permission, the credit repair consultants contact the credit reporting agency and have the incorrect information removed as soon as possible. The experts will go through your report with a fine-tooth com and come up with a plan to improve your credit score. Remember, these credit repair professionals have worked on thousands of accounts and have documented success.

Think about this situation: you are shopping for a mortgage but also have errors on your credit score. If you are in a situation where you need to see quick results but are disputing your score on your own, these experts can really save the day. It may be worth the money to hire help.

However, when using a credit repair consultant, you must provide them with full transparency. Things that seem trivial to you can impact the outcome of your credit rebuilding goals. Be honest about everything.

Key takeaways to keep in mind

It takes a lot of effort and discipline to have a good credit score. The benefit of all this hard work is being able to live the best version of your life. Your borrowing costs are much lower, and you have access to financing that allows you to reach your financial goals.

When you take proactive steps to improve your credit, you will be able to buy a home sooner or buy a new car. The fact that you are reading this is the first step towards your new life of financial independence. Just stick with the advice we’ve provided and reach out for help whenever you need it.

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