Our credit score is a key factor in your financial health. It reflects your creditworthiness and directly impacts how much you can borrow, the interest rates you receive, and the fees you may pay.
Your score is calculated based on your credit report, which includes:
➤ Payment history
➤ Total debt owed
➤ Length of credit history
➤ Types of credit used
➤ Frequency of credit applications
In Canada and the U.S., most lenders rely on the FICO credit score system (300–900).
- Higher scores improve your chances of mortgage approval and secure you better loan terms.
- Lower scores make borrowing more difficult and costly.
Key Factors That Affect Your Credit Score
1. Defaulting on a Loan
The most damaging factor — a default can remain on your credit report for up to 7 years.
2. Late Payments
Even a single missed payment can cause a significant drop in your score.
3. Credit Utilization
Aim to keep balances below 30% of your credit limit to demonstrate responsible usage.
4. Credit Applications
Multiple “hard inquiries” within a short period can signal higher risk to lenders.
5. Closing Credit Accounts
This reduces the length of your credit history, which may negatively impact your score.
How to Maintain a Healthy Credit Score
✅ Pay on time, every time – consistent payments are the foundation of good credit.
✅ Keep balances low – aim to use less than 30% of your credit limit.
✅ Be selective with new credit – apply only when you truly need it.
✅ Monitor your credit report – check regularly and dispute any errors.
✅ Build a strong history – the longer your credit record, the better. If you’re new, consider starting with a secured credit card.
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Steps to Rebuild or Improve Your Credit
1. Get Your Credit Report
Request a free copy from Equifax or TransUnion. Review it carefully and dispute any inaccuracies.
2. Pay Down Debt
Reducing outstanding balances improves your credit utilization ratio, which helps raise your score.
3. Budget & Pay on Time
Use a budgeting tool or spreadsheet to prioritize bills and ensure consistent, on-time payments.
4. Seek Professional Guidance
If managing debt feels overwhelming, consider working with a credit counselor or financial advisor for tailored strategies to rebuild your credit.
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Information is deemed reliable but not guaranteed. Sourced in part from the Toronto Regional Real Estate Board (TRREB). Provided solely for consumers with a bona fide interest in the purchase, sale, or lease of real estate. Unauthorized use, reproduction, or distribution is strictly prohibited.