Your credit score in Canada reflects how you have managed credit, and the main factors are payment history, credit utilization, length of history, credit mix, and new inquiries. Payment history and utilization generally carry the most weight.
Your credit score in Canada is a three-digit number that lenders use to estimate how risky it is to lend to you. The main factors are payment history, credit utilization, length of credit history, credit mix, and new credit inquiries. Payment history and utilization generally carry the most weight, while the other factors matter less but can still move your score over time.
Equifax and TransUnion each create credit scores using their own models. The exact formula is not public, and the two bureaus may weight the categories differently. Still, the broad categories are consistent, and understanding them helps you see what affects your credit score and why. For official information on credit reports and scores, see the Financial Consumer Agency of Canada.
How the main factors fit together
The table below shows the five main categories and their general relative weight. The labels are qualitative because the precise percentages vary by scoring model and by credit bureau.
| Factor | What it reflects | Relative weight |
|---|---|---|
| Payment history | Whether you pay on time, plus any missed payments, collections, or insolvency records. | Highest |
| Credit utilization | How much of your available revolving credit you use, both overall and per account. | High |
| Length of credit history | How long your accounts have been open and the average age of your credit file. | Moderate |
| Credit mix | Whether you have experience with different types of credit, such as instalment and revolving. | Lower |
| New credit inquiries | How often and how recently you have applied for new credit. | Lowest |
Some scoring models also consider public records, such as bankruptcies or consumer proposals, and whether you have recently opened several new accounts. These items often fall under payment history or new credit, depending on the model.
Payment history: the largest single factor
Payment history is usually the biggest driver of your credit score. It reflects whether you have paid your bills on time and whether any accounts have gone to collections, been written off, or been included in an insolvency. A single missed payment can lower your score, especially if you have a short credit history. The impact tends to shrink as the missed payment gets older, but the record can stay on your credit report for several years.
If you co-sign a loan, the account typically appears on your credit report as well as the primary borrower's report. That means a late payment by the primary borrower can affect your credit score, even if you were not the one making the payment. The Financial Consumer Agency of Canada explains the disclosure rules that apply to joint borrowers. Before you co-sign, understand how the account will be reported and what happens if the other person misses a payment. You can read more in our guide to what it means to be a co-signer.
Credit utilization: the second biggest factor
Credit utilization measures how much of your available revolving credit you are using. Revolving credit includes credit cards and lines of credit. If you have a credit card with a $4,000 limit and a $2,000 balance, your utilization on that card is 50%. Scoring models look at both your overall utilization across all revolving accounts and your utilization on individual accounts.
Lower utilization generally supports a higher credit score. Using a large share of your available credit can signal that you are relying heavily on borrowing, which may lower your score even if you make every payment on time. Paying down balances, making multiple payments during the month, or requesting a credit limit increase can reduce your utilization ratio, but a limit increase may also involve a hard inquiry. The effect of utilization can change quickly because balances are reported to the bureaus regularly, often monthly.
Length of credit history, credit mix, and new inquiries
These three factors usually carry less weight than payment history and utilization, but they still matter.
Length of credit history looks at how long your accounts have been open, the age of your oldest account, and the average age of all your accounts. A longer history can help your score because it gives lenders more information about how you manage credit. Closing an old credit card can shorten your credit history and reduce your available credit, which may increase your utilization ratio. For that reason, many people keep older accounts open if there is no annual fee and they can manage the card responsibly.
Credit mix reflects whether you have experience with different types of credit, such as credit cards, lines of credit, car loans, student loans, and mortgages. A diverse mix can help your score slightly, but you do not need every type of credit. Opening a loan you do not need just to improve your mix is usually not worth the cost.
New credit inquiries happen when a lender checks your credit as part of an application. Hard inquiries can lower your score by a small amount, and the effect usually fades within a year. Soft inquiries, such as checking your own credit report or a lender checking your credit for a pre-approved offer, do not affect your score. Multiple applications for the same type of loan, such as a mortgage or car loan, may be grouped together by some scoring models if they occur within a short period. Credit card applications are usually counted separately.
The Financial Consumer Agency of Canada has general information on loans and borrowing that can help you compare products before you apply.
Why co-signing and joint credit show up on your report
Co-signing a loan is a form of joint credit. When you co-sign, you agree to be responsible for the debt if the primary borrower does not pay. The lender will usually check your credit, and the account will typically appear on your credit report. This can affect your credit score in both directions. On one hand, a new account can add to your credit mix and, over time, your length of credit history. On the other hand, it increases your total debt and your monthly payment obligations, and any missed payment can damage your score.
If you are considering co-signing, the New Brunswick Financial and Consumer Services Commission outlines what you should know before co-signing a loan. You should also think about how the loan will affect your ability to borrow for your own goals, such as a mortgage or car loan. If you already have damaged credit, co-signing may not be possible, and you may need to look at bad credit loans or work on rebuilding your score first.
Checking your credit report and common mistakes
Your credit score is based on the information in your credit report, so errors can lower your score. Common errors include accounts that are not yours, incorrect balances, duplicate collections, or a payment marked late when you paid on time. You can request your credit report from Equifax and TransUnion. The Financial Consumer Agency of Canada explains how to get your reports and how to dispute errors.
Common mistakes that affect your credit score include:
- Assuming a co-signed loan will not affect your credit. It usually appears on your report and can help or hurt you.
- Closing old credit card accounts that you have had for years, which can shorten your history and raise your utilization.
- Applying for several credit cards or loans within a short period, which creates multiple hard inquiries.
- Not checking your credit report for errors, fraud, or accounts you do not recognize.
- Making only the minimum payment and letting balances grow, which increases your utilization ratio.
- Missing a payment because you assume the other borrower or co-signer will cover it.
If you are planning to borrow, use a loan payment calculator to see how different payments fit your budget before you apply. That can help you avoid applying for credit you cannot manage, which is one of the most direct ways to protect your credit score.