Your guide to understanding credit scores in Canada

Your credit score is a crucial aspect of your financial health in Canada. It significantly determines your eligibility for loans, credit cards, rental applications, and more. In this blog article, we'll dive into how credit scores work in Canada and what you can do to maintain a healthy credit profile.

A hand holding a credit card with a purple backdrop featuring four icons: a house, a car, a credit card and a smartphone.

What is a credit score and credit report?

What information is in a credit score?

Your credit score is a snapshot of your credit report. It doesn't contain personal information like income, employment history, or bank account balances. Instead, it focuses on your credit-related data, such as:

Open and closed credit accounts
Payment history
Credit limits and balances
Public records (e.g., bankruptcies, collections)
Credit inquiries

How is your credit score calculated?

A temperature gauge metre with a dial ranging from red hot to green

A credit score is a three-digit number that represents your creditworthiness. It ranges from 300 to 900, with higher scores indicating better credit health.

What’s the difference between hard and soft credit score inquiries?

Soft inquiries, like checking your score or pre-approved offers, don't affect your credit score and are only visible to you. Hard inquiries, such as applying for a mortgage or credit card, can lower your score and are visible to others. TELUS Online Security inquiries are soft and don't impact your score, allowing you to monitor your credit without affecting your rating. Hard inquiries stay on your report for up to three years, with their impact lessening over time. Collection accounts remain for six years from the first missed payment, significantly affecting your score. Understanding these can help you manage your credit better.

Why is your credit score Important?

Your credit score is an important factor in many financial decisions. Lenders, landlords, and employers may check your credit to assess your financial responsibility. A good credit score can help you:

Qualify for loans and credit cards with better terms and lower interest rates
Secure rental housing more easily
Potentially get better rates on insurance premiums
Establish utility services without a deposit

What is a good credit score?

In Canada, credit scores range from 300 to 900. Generally, a good credit score is considered to be 660 or above. However, the higher your score, the better your chances of qualifying for the best credit products and terms.

How can you check your credit score?

There are several ways to check your credit score in Canada:

Through your bank or credit card issuer: Many financial institutions now offer free credit score access to their customers.
Directly from credit bureaus: You can request your credit report and score from Equifax or TransUnion, Canada's two main credit bureaus. Credit report access from these bureaus is free once a year. However, a fee may be involved if you also want to access your credit score, typically costing between $20 and $24 when purchased online.
TELUS Online Security: This service includes credit score and report monitoring through its exclusive partnership with Norton™.¹ You can access your credit score by opening your Norton Identity app, selecting ‘Credit Monitoring,’ and clicking ‘Get Latest Score & Report.’ It may take a moment to generate if it's your first time. Depending on your TELUS Online Security plan, you would have credit monitoring from one or two credit bureaus, and daily or monthly access to your credit report and score.²˒³ You can view the different plans
here
.

How do credit bureaus work?

Credit bureaus in Canada collect and maintain credit information from various sources, including lenders, creditors, and public records. They use this data to generate your credit reports and scores. By monitoring your credit reports from these bureaus, you can stay informed about your credit health, detect potential fraud or errors early, and take steps to maintain a good credit standing.

What makes TELUS Online Security different?

TELUS Online Security offers access to your credit score and report through TransUnion. TELUS Online Security also provides additional benefits:

Regular updates: The TELUS Online Security Complete and Ultimate plans allow you to check your credit score and report daily, allowing you to track changes over time. The Standard plan allows you to check monthly.²,³

Alerts: TELUS Online Security notifies you of significant credit report changes, helping you quickly detect potential fraud or errors.

Always on monitoring: All plans have always-on credit monitoring for changes to your credit report and score so you can take immediate action.⁴ The Ultimate plan also offers credit score trends, plus financial monitoring for credit card transactions, bank transactions, and investment account activity.²˒³

How can you improve your credit score?

Improving your credit score requires time and effort. Here are some tips:

Pay your bills on time
Keep your credit utilization low (aim for 30% or less)
Avoid applying for new credit too often
Maintain a mix of credit types (e.g. revolving and installment credit)
Check your credit report regularly for errors and dispute any inaccuracies

Is credit monitoring enough?

While credit monitoring is essential for maintaining your credit health, there are more complete solutions. Credit monitoring alerts you to changes in your credit report but doesn't prevent fraud or errors from occurring. These alerts notify you of key changes to your profile, including a change of address, name, credit report inquiries, new accounts opened in your name, activity on dormant accounts, and accounts turned over for collections. To fully protect your credit, consider additional measures such as:

Using strong, unique passwords for your financial accounts
Avoiding sharing personal information online or over the phone
Placing a fraud alert or credit freeze on your credit report if you suspect you're at risk of identity theft

Subscribing to a comprehensive solution like TELUS Online Security, which includes credit monitoring and many other features, is a wise way to protect your financial data and accounts. Not only will it help you manage and maintain good credit, but it will also safeguard your credit file and accounts from being infiltrated by identity thieves.

How do credit bureaus work?

Credit monitoring with TELUS is easy. After activating your TELUS Online Security plan, open your Norton Identity app, and select “Credit Monitoring” to obtain your latest credit score and report. TELUS Online Security will monitor your credit report and notify you of any changes or suspicious activity.⁴ Check out the step by step instruction video

here

.

Subscribing to a comprehensive solution like TELUS Online Security, which includes credit monitoring and many other features, is a wise way to protect your financial data and accounts.

A TELUS critter hedgehog beside a lock and key icon

How do you dispute a credit report?

If you find an error on your credit report, you can dispute it with the credit bureau that provided the report. The bureau will investigate the dispute and update your report if the information needs to be more accurate. Providing supporting documentation when disputing an error is essential to help resolve the issue more quickly. TELUS Online Security also includes easy access to full service live support and identity theft restoration specialists who help resolve these issues on your behalf.

How do credit bureaus work?

Taking control of your credit score is an investment in your financial well-being. By understanding the key factors that impact your score, utilizing powerful tools like TELUS Online Security, and adopting responsible credit habits, you can build a solid credit foundation that unlocks a world of financial opportunities in Canada.

With knowledge and proactive choices, you can more easily achieve your financial goals and secure a brighter economic future.