Understanding Your Credit Score: What Builds It and What Hurts It
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For Ottawa residents, a credit score can influence the cost of a car loan, access to a credit card and even a rental application. In Canada, scores generally range from 300 to 900. A higher number usually signals a stronger record of managing borrowed money.
What are the categories?
A commonly used educational guide describes scores of 300–559 as poor, 560–659 as fair, 660–724 as good, 725–759 as very good, and 760–900 as excellent. These ranges are a guide rather than universal approval rules. Lenders use different scoring models and consider other factors, including income and existing debts. A high score alone does not guarantee approval.
What builds a stronger score?
Paying on time is the most important habit. Make at least the required minimum payment by its deadline; paying your credit card balance in full also helps avoid interest.
Keep balances low. The Financial Consumer Agency of Canada recommends using less than 30% of your available credit, below $900 on a $3,000 limit, for example. A longer, well-managed credit history and applying for credit only when needed can also help.
What can damage it?
Late or missed payments, balances close to credit limits, unpaid debts sent to collections and repeated credit applications can lower a score. Bankruptcy and other insolvency records can also have lasting effects. Checking your own credit report or score does not lower it.
What are the consequences?
Poor credit can mean higher borrowing costs, smaller credit limits or rejected applications. It may also make renting a home more difficult. Stronger credit can improve access to financing and better interest rates, although each lender makes its own decision.
Improvement takes consistent habits over time. Review your reports for mistakes, dispute inaccurate information and contact your lender early if you are struggling to pay.
Sources
Financial Consumer Agency of Canada: Credit report and score basics
Financial Consumer Agency of Canada: Improving your credit score
TransUnion Canada: Credit score
Canada Post: Understanding your credit score (educational ranges attributed to Equifax)
