What Is a Good Credit Score vs a Bad Credit Score?
Credit scores in Canada range from 300 to 900 and play a role in virtually every major financial decision you make, from getting approved for a rental to accessing more credit and qualifying for a mortgage. The higher your score, the better your odds of being approved, and it can even help you secure more competitive mortgage rates.
Many Canadians don’t think much about their credit score until they need it to apply for a car loan, sign a lease, or sit down with a lender to qualify for a mortgage and buy a home. By then, the score and history on your credit report already matter. The difference between a good and a bad credit score can make or break an application.
Key Takeaways
- A good credit score signals to lenders that you’re a low-risk borrower, which can open the door to better mortgage rates.
- The score you see when you check your credit is not always the score your lender sees.
- Credit scores respond to behaviour, and consistent on-time payments and lower credit utilization are the fastest ways to improve your score.
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Understanding Credit Score Ranges in Canada
Not all credit scores are calculated using the same scoring model, so you may have a slightly different score depending on the credit bureau and the scoring model they use. In Canada, Equifax and TransUnion are the two main credit bureaus. Each captures, updates, and stores your credit history and data, then applies its own scoring model to produce a score based on weighted factors such as payment history, credit utilization, and credit mix.
What many borrowers don’t realize is that Canadian mortgage lenders often use another scoring model, the FICO score, to evaluate risk. The Fair Isaac Corporation (FICO) is not a credit bureau; it’s a separate scoring model lenders apply to your existing credit bureau data. For example, a lender might pull your credit file from Equifax, run it through the FICO scoring model, and arrive at a slightly different number than what your Equifax report shows.
You can monitor your credit score yourself, usually for free through Equifax and TransUnion, but you generally won’t know your FICO score unless a lender shares it with you directly. When preparing for a mortgage pre-approval, it’s worth checking your score through both credit bureaus so there are no surprises when your lender pulls their version.
Here’s how each one breaks down credit score ranges:
Equifax Canada
| Score Range | Rating |
|---|---|
| 760–900 | Excellent |
| 725–759 | Very Good |
| 660–724 | Good |
| 560–659 | Fair |
| 300–559 | Poor |
TransUnion Canada
| Score Range | Rating |
|---|---|
| 781–850 | Excellent |
| 661–780 | Good |
| 601–660 | Fair |
| 300–600 | Poor |
FICO Score
| Score Range | Rating |
|---|---|
| 800+ | Exceptional |
| 740-799 | Very Good |
| 670-739 | Good |
| 580-669 | Fair |
| 300–579 | Poor |
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What Counts as a Good Credit Score for a Mortgage
When it comes to mortgage qualification, lenders aren’t just looking at your credit score since this only demonstrates your ability to manage and repay your other debt obligations so far. They’re assessing your credit score alongside your income, debt service ratios, down payment, and the property you’re buying to ensure you have the financial ability to make mortgage payments on top of everything else.
Lenders set minimum credit score requirements for their mortgage products, and default insurers like CMHC have their own minimums for insured mortgages. When you apply for a mortgage, here’s what lenders typically want to see:
- 680+: Most lenders, including the Big Banks and credit unions, will consider you a low-risk borrower with a credit score of 680 or higher. You’ll likely qualify for their best-advertised fixed-rate and variable-rate uninsured products as well as an insured or insurable mortgage, depending on how much down payment you are putting down.
- 600–679: You can still qualify for an insured or insurable mortgage (less than 20% down), and have access to the best advertised rates. A credit score in this range would, however, disqualify you from an uninsured mortgage with most lenders.
What Counts as a Bad Credit Score for a Mortgage
A score below 600 is generally where mortgage options start to dry up with many lenders. That doesn’t mean homeownership is off the table, but it does mean higher borrowing costs, larger down payment requirements, and fewer lender options.
More often, a poor credit score reflects a pattern: chronic late payments, maxed-out credit cards, a consumer proposal, or a past bankruptcy. Each of these signals to lenders that extending credit to you carries a higher risk. Many lenders will decline an application outright, leaving borrowers to explore alternative lending options or work to improve their credit score before trying again.
Frequently Asked Questions (FAQ) About Good vs Bad Credit Scores
What is the minimum credit score to get a mortgage in Canada?
For insured mortgages (with less than 20% down payment), most lenders require a minimum score of 600, as this is the minimum required by the default insurers. For uninsured mortgages (with 20% or more down payment), the standard minimum is typically 680 or higher. Borrowers with credit scores below 600 may need to explore alternative lending solutions.
How long does it take to improve a bad credit score?
There’s no fixed timeline for improving a bad credit score since it depends on what is affecting your score. Small improvements can be reflected in your credit score more quickly, like lowering your credit card utilization. More significant damage, like a missed payment, a consumer proposal, or a bankruptcy, takes longer to recover from and will remain on your credit file for longer. Consistent on-time payments and responsible credit use will help you improve your score over time.
Can I get a mortgage with a 600 credit score?
A 600 credit score allows you to qualify for insured mortgage products, which require less than 20% down and carry mortgage default insurance.
Does a variable-rate mortgage have different credit score requirements than a fixed-rate mortgage?
Lenders apply the same credit score minimums regardless of whether you’re choosing a fixed or variable mortgage.
Do both Equifax and TransUnion scores matter for a mortgage?
Some lenders pull from one bureau, others pull from both. It’s worth knowing your score with each, as they can differ depending on which creditors report to which credit bureau. Major discrepancies between the two credit bureaus are sometimes a sign of an error worth investigating.
Will checking my own credit score lower it?
No, checking your own score through your bank, a credit monitoring service, or directly through Equifax or TransUnion counts as a soft inquiry and has zero impact on your credit score. Only hard inquiries from anyone processing a credit application will affect your score. Even then, a hard inquiry will only lower your score slightly for a short time, typically a few months, or up to six months if a new mortgage is registered on your credit file.
Final Thoughts
Your credit score is one of the most controllable variables in your mortgage strategy. Whether you’re sitting comfortably above 680 or working your way back from a rough patch, understanding where your credit score stands and how to improve it gives you time to make improvements before shopping for a home.
A few small changes to your habits, like paying all bills on time, keeping credit card balances low, and checking your credit report regularly, can help you maintain a good credit score. If you’re planning to buy a home, renew, or refinance a mortgage, get your credit in order before applying.
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