What is the average credit score in Canada?

A credit score is a 3-digit number that lenders use to determine a borrower's credit risk.

The average Canadian FICO® score is 760 as of April 2024, down from 762 in April 2023. The high cost of living and its impact on affordability are a few reasons why many Canadians face challenges.

If your credit score is lower than average, there are several ways to boost it. In this post, we’ll explore how to check your credit score, ways to increase it and mistakes to avoid.

What is a credit score?

Your credit score is a three-digit number calculated from information on your credit report. When you apply for a credit card or any type of loan, the lender will look at your credit score to determine your eligibility.

TransUnion® and Equifax® are the two main credit bureaus that generate Canadian credit scores based on borrower data. They calculate this number based on factors such as credit card balances, outstanding debt, recent credit applications, missed payments, debts in collection and records of bankruptcy or insolvency.

In Canada, the typical credit score range is 300 to 900. This number is dynamic and changes based on your actions and indicates your financial health. A higher credit score shows that you use credit responsibly, so it will generally be easier for you to qualify for new loans and credit cards.

Average credit scores by city and province

A 2022 study conducted by Borrowell indicated that Markham, ON, had the highest average credit score at 720, which qualifies as “good.” Meanwhile, the city and province with the lowest average credit score was New Brunswick at 640, falling under the “below average” category. 

The table below lists the average credit score by city and province. 

What is considered a “good credit score”?

A higher credit score indicates good financial health, while a lower score signals that you may not have been responsible with your credit accounts. But what’s a good credit score? Here’s a breakdown based on Canadian credit scoring:

• Poor (350 to 574): Borrowers within this credit score range may have a high credit utilization ratio, have declared bankruptcy or defaulted on loans. It may be difficult to qualify for loans, mortgages, auto loans or credit cards.  
• Fair (560 to 659): While you may still be able to get credit cards or loans, if you fall in this range, you’ll likely pay higher interest rates.
• Good (660 to 724): While you may still not qualify for the best rates in this range, you generally won’t have a hard time getting access to credit.
• Very Good (725 to 759): Borrowers in this range will enjoy access to competitive rates and financial perks.
• Excellent (760 to 900): You’ll get quick approvals, higher loan amounts and the lowest rates if your credit score is excellent. You’ll also get access to the best credit card benefits as a perk.

As of 2024, the average credit score in the U.S. was 715, slightly lower than the Canadian average of 760. In the U.S., the average FICO score hasn’t decreased for 11 years annually. In Canada, a credit score of 690 and above is generally considered good.

How to increase your credit score

There are several ways to improve your credit score if it’s below the national average. Start by getting a copy of your credit report to know where you stand, then follow these steps to boost your score.

Pay your bills on time

One of the best things you can do to improve your credit score is to pay your bills on time. Late payments can lower your credit score, but you can avoid it by setting up automatic payments. You won’t have to keep track of your billing cycle, and the monthly payments will automatically be deducted from your bank account.

If you choose to pay your bills online, pay well before the due date so the portal can process your transaction in time. This will ensure you never miss a payment and won’t have to pay a late fee.

Reduce your credit utilization ratio

The credit utilization ratio is expressed in percentages and measures the total credit you currently use divided by the credit available. Maintaining a credit utilization ratio of under 30% is a good way of improving your credit score.

Pay off your revolving debts, like credit card balances, to lower this ratio. If you have any credit cards that you aren’t using, keep them active. This will ensure that your total available credit is higher. 

Diversify your credit mix

A credit mix refers to the different types of credit accounts you have. This is a factor credit bureaus consider when calculating your credit score. When you have a diverse range of credit types, it shows lenders that you can manage different types of accounts responsibly.

Here’s a look at the main account types you can have:

• Installment loans (personal loans, auto loans or mortgages)
• Revolving credit (credit cards, lines of credit or a home equity line of credit) 
• Open accounts (phone plans or charge cards)

If you’ve only used credit cards, consider opting for other accounts like installment loans and mortgages. Consider your overall budget and ability to repay what you borrow before you do this.  

Check your credit report for errors

Review your credit report regularly to keep track of your credit score. This is also a good way to spot errors or inaccurate information on your file. You may spot open accounts that don’t exist or old negative information that hasn’t been removed.

If you notice anything you don’t recognize on your credit report, get it fixed immediately with a dispute. Once it’s removed, you’ll likely see an improvement in your credit score. 

Follow these steps to dispute information on your credit report:

• Gather documents, statements and receipts to prove your claim.
• Fill out the forms, attach the relevant documents and submit them to the credit bureau. If you’re filing a dispute with Equifax, you can submit it online or through mail. For TransUnion, you can file a dispute online, through mail or by phone.
• Contact the lender and ask them to verify the disputed information to speed up the process.
• The credit bureau will investigate the claim and change the information. 

Credit score mistakes to avoid

In some cases, your credit score may take a dip because of unintentional mistakes or financial regrets. For 41% of Canadians, financial mistakes have delayed important milestones like making major purchases or paying off debt. Here are a few mistakes you should avoid: 

Missing payment due dates

Your payment history is one of the most important factors determining your credit score. When you miss a due date, your credit score will take a hit, and that information will also stay on your credit report for up to six years.

This can be a simple oversight that’s easy to avoid. Set up reminders on your phone or consider autopay to make sure you always pay your bills on time. 

Maxing your credit limit

While having a high credit limit is good, maxing it out can harm your credit score. Your credit utilization ratio is the percentage of your credit limit you use. This plays an important role in determining your credit score.

Ideally, you should pay off your balance in full at the end of the month. If you can’t do that, make it a goal to keep your credit utilization ratio under 30%. This will also make it easier for you to qualify for loans and credit cards in the future. 

Ignoring interest rates

A lot of borrowers don’t read the fine print when they borrow a loan or get a new credit card. Not all loans and credit cards are the same. Compare multiple options and pay special attention to the annual percentage rate (APR), which accounts for interest rates and fees to get the best possible rate.

You can avoid paying interest on credit cards if you pay off the balance in full every month. If you’re already stuck with high-interest debt, consolidate your debts or apply for a balance transfer credit card to save on interest.

Applying for multiple cards at once

Your credit score takes a small hit every time you apply for a credit card because the lender will run a hard check. While the effect is small and temporary, it can add up when applying for multiple cards simultaneously.

Keep new credit card applications to a minimum if you want to improve your credit score. This doesn’t mean you should completely avoid applying for a new card, especially one that comes with a better introductory rate for a balance transfer. The goal is to not go overboard with it.

How to check your credit score

With so many credit score myths, figuring out the best way to check your credit score can be difficult. It’s a good idea to check your credit report regularly to see how your credit score has improved and if there’s any inaccurate information you may have to dispute.

Here are three ways you can check your credit score for free in Canada: 

• Canadians can get one free credit report per year from TransUnion or Equifax. You can apply for your free credit score check by mail or online. 
• Use an online service like Borrowell to check your credit score for free within minutes. 
• Some Canadian banks like CIBC, RBC and Scotiabank offer free credit reports if you have an account.

Some financial institutions also offer credit monitoring services that notify you when your credit score or credit report gets updated. You may want to consider this if you’ve been a victim of a data breach or fraud. Keep in mind that you’ll need to pay for this service. 

Learn how to improve your credit with Money.ca

So, what is the average credit score in Canada? The average Canadian has a credit score of 760. Check your credit score regularly to see where you stand when compared to this average. If you want access to lower interest rates and higher loan amounts, a higher credit score can help.

You can do several things to improve your credit score, such as checking your credit report regularly, paying your bills on time and reducing your credit utilization rate. Read the guides and articles on Money.ca for more strategies and tips to improve your credit.

Credit score FAQ

Credit scores can be confusing. Here are the answers to a few common questions that can help. 

Scott Birke Content editor, Money.ca

Scott Birke Content editor, Money.ca

Scott Birke is a financial content editor at Money.ca.

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