What is a credit score?

A credit score is a three-digit number that is calculated using a mathematical formula based on the information in your credit report. You get points for actions that demonstrate to lenders that you can use credit responsibly. You lose points for things that show you have difficulty managing credit. To find out what counts toward your credit score, see page 16.

In Canada, credit scores range from 300 to 900 points. The best score is 900 points.

Lenders and credit reporting agencies produce credit scores under different brand names, such as Beacon, Empirica and FICO®.

Your score will change over time as your credit report is updated.

Businesses use your credit report and score to see how risky it would be for them to lend you money. It is up to each lender to decide on the lowest score you can have and still borrow money from them. Lenders may also use your score to set your interest rate and credit limit. If you have a high credit score, you may be able to get a lower interest rate on loans, which can save you a lot of money over time.

While they are very important, credit scores are usually not the only thing a lender will look at. Often, they will also consider other factors, such as your income, job or any assets you own.




Why might the credit score I receive be different from one a lender is using?

A credit score you order for yourself may not be the same as a score produced for a lender.

This can happen even if they are created at the same time using the same information in your credit report because there are different types of credit scores that are designed to meet the needs of lenders.

A lender may put more weight on certain information depending on the reason it is calculating your score. For example, it may want to assess your risk of becoming bankrupt or determine whether you qualify for a mortgage.

Your own credit score should still be in the same range as a score created for a lender.





Take credit for your actions!

Do you have a strong credit score? Use this to your advantage when you negotiate for a loan. Point out that you represent a lower risk to the lender and ask for a lower interest rate or better terms.