How Credit Scores are Calculated in Canada.

Understanding how your credit score is calculated is the key to improving it. In Canada, both Equifax and TransUnion use similar scoring models, and each factor plays a different role in determining your overall score. Here’s a simple, bullet‑point breakdown of how credit scores are calculated.

What Makes Up Your Credit Score?

Credit scores in Canada are calculated using five main factors:

• Payment history – 35%

• Credit utilization – 30%

• Length of credit history – 15%

• Credit mix – 10%

• New credit inquiries – 10%

These percentages show how heavily each category influences your score.

1. Payment History (35%)

• The most important factor

• Tracks whether you pay bills on time

• Includes credit cards, loans, lines of credit, and mortgages

• Late payments, missed payments, and collections lower your score

• Consistent on‑time payments build strong credit

2. Credit Utilization (30%)

• The percentage of your available credit you’re using

• Example: Using $600 of a $2,000 limit = 30% utilization

• Ideal utilization is under 30%

• High balances signal risk to lenders

• Paying down balances quickly boosts your score

3. Length of Credit History (15%)

• How long your accounts have been open

• Older accounts help your score

• Closing old accounts can lower your average age

• Lenders prefer long, stable credit histories

4. Credit Mix (10%)

• Variety of credit types you use

• Examples:

  • Credit cards

  • Car loans

  • Lines of credit

  • Mortgages

• A healthy mix shows you can manage different credit products

5. New Credit & Hard Inquiries (10%)

• Each application for credit creates a hard inquiry

• Too many inquiries in a short time can lower your score

• Soft checks (like checking your own score) don’t affect it

• Space out credit applications to avoid score dips

How Equifax and TransUnion Differ

• Both use similar scoring models

• Scores may differ slightly due to:

  • Reporting dates

  • Lenders reporting to only one bureau

  • Minor calculation differences

• Lenders may check one or both bureaus

What Hurts Your Credit Score the Most

• Late or missed payments

• Maxed‑out credit cards

• High utilization

• Too many credit applications

• Closing old accounts

• Accounts sent to collections

What Helps Your Credit Score the Most

• Paying bills on time

• Keeping balances low

• Maintaining long‑standing accounts

• Using a mix of credit types

• Limiting hard inquiries

• Checking your report for errors

Final Thoughts

Knowing how credit scores are calculated in Canada gives you the power to improve your financial health. By focusing on the factors that matter most — especially payment history and utilization — you can steadily build a stronger score and unlock better borrowing opportunities. Ask me how.