The 5 Factors That Determine Your Credit Score in Canada
Your credit score can impact more than just loan approvals. In Canada, it can affect your ability to qualify for credit, secure a lower mortgage rate, rent an apartment, or even land certain jobs.
In this video, Jeff Schwartz explains the five key factors that determine your credit score in Canada — including payment history, credit utilization, credit age, credit mix, and credit inquiries. You’ll learn how each factor works and what you can do to strengthen your credit profile.
Wondering what the five factors are that determine your credit score in Canada?
It’s a great question and an important one to ask when talking credit. The answer will help you apply for credit. Get a lower rate on a mortgage, land a job, or even secure a place to live. The list is long. In Canada, credit scores are based on five main factors: payment history, credit utilization, credit age, credit inquiries, and credit mix. Together, they form the pictures lenders see when they consider lending to you. Keep watching until the end of the video for one credit tip that can help raise your score faster. Now, let’s go over each factor. One, payment history. Payment history covers your payments on loans and credit card bills. Paying on time matters most.
Two, utilization.
Utilization is how much of your available credit you’re using. The lower the better. Three, credit age. Credit age is how long your accounts have been open. Don’t close old accounts in good standing unless they’re costing you. Four, new credit. New credit includes inquiries, which are recent applications for credit. Applying for a bunch of cards or loans at one time could be a red flag for lenders. Now, to find out exactly how inquiries affect credit, watch the next video. Five, credit mix. Having a good credit mix shows whether you’re responsibly able to manage different types of credit. A person with a credit card, a car loan, and a mortgage has great credit variety. You can improve your credit score by making on-time payments, reducing balances, avoiding unnecessary applications, and keeping older good accounts open. Small, consistent moves help, but timing matters, too. That’s why you should pay down your credit card balance before your statement closing date, not just before the due date. That lowers your reported utilization.
Ask your credit issuer when they report account balances to the bureau. Then pay down your card before that reporting date. It’s a small timing move that many Canadians overlook. If you want help improving these five factors, get free confidential guidance from a trained credit counselor at Consolidated Credit Canada. Getting control of your payments could make a real difference. Subscribe to learn more about how credit works and check out the next video to discover the difference between a hard inquiry and a soft inquiry.
