What is a fair credit score?

 

A fair credit score starts at a base rating of 575 and goes to a score of 650. The closer your score is to the higher end of that range, the more trustworthy you will seem to banks, lenders, employers, and landlords. The closer your score gets to 575, the nearer you are to the bad credit score range.

Basically, a fair credit score means you pose an average level of risk to credit agencies and financial institutions. You aren't a high-risk borrower, you’re not the lowest-risk borrower, but you have plenty of room to improve your score and better your finances.

 
 
 
 
 
300
575
650
750
900
Bad
Fair
Good
Excellent

How a fair credit score affects your finances

 

With a fair credit score you’ll qualify for some competitive financial products, but not all.

Banks and other lenders check your credit score when they evaluate your risk level as a borrower and decide which of their products you qualify for. If you have an average credit score, they’ll approve you for most financial products and services. There’s just no guarantee that you’ll get the best interest rates or most premium credit cards — unless you compare offers across different financial institutions. A fair credit score isn’t as great as a good credit score, but it’s still favourable to bad credit.

Here’s how a fair credit score may impact your financial needs and goals:

Financial goalThe impact of your credit score
Getting a credit cardA fair credit score will help you qualify for many great credit cards. You may not get approved for the most competitive card options (like cards with exclusive perks), but you will still qualify for excellent cards with rewards, low interest rates, and other benefits.
Qualifying for a loanWith a fair credit score, you’ll be able to get a personal loan or a car loan. You can apply for these loans through a major bank or lender, but you may not qualify for the lowest interest rates. Remember to check your loan options at alternative lenders as well — they may be able to offer you more competitive loan terms.
Renting a homeAn average credit score can help you apply for rental homes or apartments. Some landlords ask for a credit check because they want to gauge how likely you are to make your rent on time. But if you’re renting in a competitive market, the landlord may give preference to applicants with higher scores.
Buying a homeYou can get approved for a mortgage with a credit score of 575 and higher. Just remember that as you improve that number, you’ll be able to qualify for lower rates and more competitive mortgage terms from major banks and other lenders.
Landing a jobA fair credit score will be viewed favourably by employers, but a job applicant with a higher score may be considered a more compelling candidate. A credit check may be required in Canada if you’re applying for a role as a civil servant or for a position in the financial services industry.

The top credit card recommendation for Canadians with fair credit

 

If you have fair credit, you’ll be happy to know that you have access to credit card options to fit your needs. While you may not get approved for the most competitive card options — those with exclusive perks and generous rewards — you will qualify for cards that still offer some great benefits. It’s important to know what cards will be available to you with an average score, as well as the benefits and limitations that come along with them.

If you have a fair credit score, here’s a great option to consider:

BMO Preferred Rate Mastercard
Fees and interest
Annual fee
$20
Purchase interest rate
11.90%
17.5% without $20 annual fee
Cash advance rate
11.90%
17.5% without $20 annual fee
Balance transfer rate
11.90%
17.5% without $20 annual fee

Want a credit card but hate paying the standard 19.99% interest rate? The BMO Preferred Rate Mastercard offers one of the lowest no-fee interest rates on the market — 17.5% — which can be further cut down to 11.9% for a low annual fee of $20 a year. You also get the benefit of an extended warranty, purchase protection and zero dollar liability — meaning if someone uses your card without authorization, you’re protected. 

How do I improve a fair credit score?

 

An average credit score means there’s plenty of room for improvement. If you want to get your number up, work on developing these habits.

Pay your bills on time

Leaving bills unpaid is never a good idea. If you don’t pay your bills, companies may hire a collections agency to track you down and, more importantly, unpaid bills can do heavy damage to your credit score. In fact, your payment history is one of the biggest factors in your credit score calculation. So set up automatic payments or use phone reminders to help make sure your bills are always paid on time.

Watch your credit utilization ratio

Your credit utilization ratio is how much credit card debt you have compared to how high your credit limit is. The lower this ratio is, the better. If you often have a lot of debt that is close to or at your maximum credit card limit, this indicates that you won’t have a lot of flexibility if something goes wrong. In other words, aim to keep this ratio as low as possible — it helps credit reporting agencies see you as low-risk.

Don’t cancel credit cards

Cancelling credit cards has a direct affect on your credit utilization ratio and your credit score. Your ratio goes up each time you cancel a card because doing so lowers the maximum amount of borrowing room you have in comparison to your debts. To avoid the potential hit your score could take when you cancel a card, only sign up for the credit cards you actually need.

Choose the right financial products

One of the best ways to improve your fair credit score is by making sure that you’re always using the right financial products responsibly. Use your credit cards, pay your bills and loans each month, and avoid taking on more debt than you can handle. For example, if you don’t need another credit card, don’t apply for one.

Haven’t checked your credit score yet?

 

Check your credit score for free at LowestRates.ca. The process is secure, private and safe — requesting your score won’t harm it in any way.