Credit is an important part of financial health in Canada. A strong credit score can help you qualify for loans, get lower interest rates, and even rent an apartment. If you’re just starting out, or if you’ve had some financial setbacks, it can be tough to build credit. But there are steps you can take to improve your credit score over time.
Login to your account today to see what your credit score is
What is Credit?
Credit is a type of loan that allows you to borrow money from a lender and then pay it back over time. The interest rate on a credit loan is usually higher than on a regular loan because the lender is taking on more risk by lending you money without requiring collateral.
Building credit can be important for many reasons. It can help you qualify for loans with better terms in the future, get approved for rent or utilities, and even improve your employment prospects. A good credit score can make life easier and save you money.
There are a few things you can do to start building your credit in Canada. One is to get a secured credit card, which is backed by a deposit you make with the issuer. Another is to take out a small loan from a financial institution and make your payments on time. You can also use a service like Borrowell to help you track your progress and find ways to improve your score.
Whatever method you choose, remember that building credit takes time and patience. But it’s worth it in the long run!
Login to your account today to see what your credit score is
The Importance of Credit
Credit is important for a number of reasons. It helps you access loans and other forms of credit, and can also impact your insurance rates. A good credit score means you’re a low-risk borrower, which is attractive to lenders. If you have a bad credit score, you may struggle to get approved for loans or lines of credit, and you may pay higher interest rates if you’re approved.
Building credit can be tricky, especially if you’re new to Canada. Here are a few tips to help you get started:
1. Get a secured credit card. This type of credit card requires a security deposit, which acts as your credit limit. Use the card responsibly by making on-time payments and keeping your balance low, and you’ll eventually qualify for an unsecured card.
2. Apply for a small loan. You can get a personal loan from a financial institution or online lender. Be sure to shop around for the best interest rate and make all of your payments on time to avoid damaging your credit score.
3. Use a co-signer. If you have someone with good credit who’s willing to co-sign for you, it can help you get approved for a loan.
Login to your account today to see what your credit score is
Different Types of Credit
There are many different types of credit in Canada. You can get credit from a variety of sources, including banks, credit unions, and private lenders. Each type of credit has its own benefits and drawbacks, so it’s important to choose the right one for your needs.
Secured Credit Cards
Secured credit cards are a good choice for people with bad credit or no credit history. These cards require a security deposit, which is usually equal to the credit limit. The deposit is held as collateral in case you default on your payments. Secured cards can help you build your credit history and improve your credit score.
Unsecured Credit Cards
Unsecured credit cards don’t require a security deposit, but they typically have higher interest rates and fees. They can be a good option for people with good credit who want to earn rewards or take advantage of 0% introductory APR periods.
Personal Loans
Personal loans can be used for a variety of purposes, from consolidating debt to paying for home renovations. They typically have fixed interest rates and monthly payments, which makes it easy to budget for your loan. Personal loans can be obtained from banks, Credit unions, and online lenders.
HELOCs
Home equity lines of Credit (HELOCs) allow you to borrow against the equity in your home. They typically have lower interest rates than other types of credit, and the interest may be tax-deductible. However, HELOCs are secured by your home, so you could lose your home if you default on the loan.
Payday Loans
Payday loans are short-term loans that must be repaid on your next payday. They typically have high fees and interest rates, which can make them very expensive. Payday loans should only be used as a last resort, when you need money immediately and can’t qualify for other types of credit.
Login to your account today to see what your credit score is
How to Build Your Credit in Canada: Step by Step
There are a few things you can do to build your credit in Canada. One way is to get a credit card and use it responsibly. You can also sign up for a credit-builder program, which will help you improve your credit score over time. Another option is to get a secured credit card, which requires you to put down a deposit that becomes your credit limit. Whatever route you choose, make sure you make your payments on time and keep your balances low to avoid damaging your credit score.
1. Start with a Secured Credit Card
If you don’t have a credit history, a secured credit card is one of the easiest ways to begin. You’ll make a security deposit that acts as your credit limit — for example, if you deposit $500, your limit will be $500.
Use this card just like a regular credit card, but make sure to:
- Make small, manageable purchases each month.
- Pay your balance in full and on time.
- Keep your credit utilization below 30%.
After 6–12 months of responsible use, many lenders may offer you an unsecured credit card or increase your limit.
2. Make Every Payment on Time
Your payment history is the most important factor in your credit score, accounting for around 35% of your total. Even one missed or late payment can have a noticeable negative impact.
To stay on track:
- Set up automatic payments or reminders.
- Always pay at least the minimum due — though full payments are best.
- Keep all accounts current, including loans, credit cards, and utilities.
Timely payments show lenders that you’re a reliable borrower.
3. Keep Your Credit Utilization Low
Credit utilization refers to how much of your available credit you’re using. Ideally, you should use no more than 30% of your total limit.
For example, if your credit limit is $1,000, try to keep your balance under $300.
High utilization can signal financial stress and may lower your score — even if you always pay on time. Keeping balances low shows lenders that you can manage credit responsibly.
4. Avoid Too Many Credit Applications
Every time you apply for a new credit product, the lender performs a hard inquiry, which can temporarily lower your credit score. Multiple inquiries within a short period can make you appear high-risk.
To protect your score:
- Only apply for new credit when necessary.
- Research and compare products before applying.
- Avoid opening several accounts at once.
If you’re shopping for a loan, try to complete all applications within a two-week window — these are often counted as one inquiry.
5. Diversify Your Credit Mix
Having a mix of different types of credit can improve your score. Lenders like to see that you can handle both revolving credit (like credit cards) and installment loans (like car or student loans).
You don’t need multiple accounts — just aim for a healthy balance, such as:
- One or two credit cards used responsibly.
- A small personal or student loan paid on time.
The goal is to demonstrate that you can manage various forms of credit responsibly.
6. Check Your Credit Report Regularly
Mistakes or outdated information on your credit report can drag down your score. It’s wise to review your credit file from all major Canadian credit bureaus — Equifax and TransUnion — at least once a year.
When reviewing your report:
- Look for incorrect personal details or late payments that aren’t yours.
- Dispute any errors directly with the bureau.
- Monitor your score regularly using free services like Borrowell or Credit Karma.
Keeping track of your credit report helps you stay informed and catch issues before they become serious.
7. Be Patient and Consistent
Building good credit takes time. Positive changes won’t show up overnight, but consistent, responsible behavior pays off. Over months and years, your score will rise as lenders see a strong track record of reliability.
Remember: The goal isn’t just to have a good credit score, but to build financial stability that helps you achieve your long-term goals — from buying a car to owning a home.
Login to your account today to see what your credit score is
What Is a Good Credit Score?
In Canada, credit scores typically range from 300 to 900. The higher your score, the better your credit health.
Here’s a general breakdown:
- 300–559: Poor — high risk for lenders.
- 560–659: Fair — may face higher interest rates.
- 660–724: Good — considered average and reliable.
- 725–759: Very good — favorable rates and easy approvals.
- 760–900: Excellent — top-tier borrower status.
A good credit score generally starts around 660 or higher. Maintaining it means paying bills on time, keeping debt low, and using credit responsibly.
Tips for Maintaining Your Credit Score
Your credit score is one of the most important pieces of financial data that lenders look at when considering you for a loan. A high credit score means you’re a low-risk borrower, which could lead to a lower interest rate on a loan. A low credit score could lead to a higher interest rate and could mean you won’t be approved for a loan at all. Here are some tips for maintaining a good credit score:
- Make all of your payments on time
One of the most important things you can do to maintain a good credit score is to make all of your payments on time. This includes your mortgage, car loan, student loans, credit cards, and any other type of loan or bill you have. Even if you can only make the minimum payment, it’s important to pay on time. - Keep your debt levels low
Another important factor in your credit score is your debt-to-credit ratio, which is the amount of debt you have compared to the amount of credit available to you. Lenders like to see a low debt-to-credit ratio, so it’s important to keep your debt levels as low as possible. You can do this by paying down your debts, and by not opening new credit accounts unless you absolutely need to. - Use credit responsibly
In general, it’s a good idea to use credit sparingly and only when you need to. If you use credit wisely, it will help your credit score in the long run. Some things you can do to use credit responsibly include only charging what you can afford to pay back, paying off your balances in full each month, and keeping your credit card balances low. - Check your credit report regularly
It’s a good idea to check your credit report periodically to make sure that all of the information is accurate. You’re entitled to one free credit report per year from each of the three major credit reporting agencies. You can also get your credit score from these agencies for a small fee.
Login to your account today to see what your credit score is
Conclusion
There are a few key things to remember when you’re trying to build your credit in Canada. First, make sure you always make your payments on time. Second, keep your credit utilization low. And finally, try to diversify your credit portfolio by using different types of credit products. By following these tips, you’ll be well on your way to building a strong credit score in no time.
Login to your account today to see what your credit score is
