What is a good credit score? Keep reading to find out.

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What is a good credit score?

A good credit score starts at a base rating of 650 and goes as high as 900. The higher your score, the more trustworthy you seem to banks, lenders, employers, even landlords.

TransUnion and Equifax, Canada’s two major credit reporting agencies, calculate your credit score and use it to gauge how likely you are to make payments on a credit card or a loan. A good score means credit agencies and financial institutions consider you a reliable borrower because you are likely to handle debt loads responsibly. So if you have a rating of 650 or above, you’re considered low-risk. Once you hit 750, you’re in the “excellent” range, which is often lumped into the “good” category.

650-900

How a good credit score affects your finances.

A good credit score is your gateway to the best financial products.

Banks and lenders look at your credit score (and your credit report) to see how reliable you are as a borrower and to decide whether or not you qualify for their products. Lucky for you, good credit scores are viewed the most favourably, and not just when it comes to scoring the best credit cards or lowest interest rates.

A high score can give you an advantage when you pursue any of these financial milestones.

Financial goalThe impact of your credit score
Getting a credit cardA good credit score gives you access to premium cards with generous rewards and exclusive perks. And the higher your score gets, the more competitive your credit card options become.
Qualifying for a loanA good credit score helps you qualify for the lowest interest rates on personal loans and car loans — you’ll also have your pick of banks and lenders when you apply. Just remember to negotiate for the lowest interest rate on your loan; a good credit score gives you extra negotiating power.
Renting a homeA good credit score improves the chances of your rental application being accepted. Landlords may reject applicants with credit scores less than 650.
Buying a homeA good credit score can help you get a lower mortgage rate from a major bank or other lender. The best rates are usually reserved for consumers with good credit scores, but you can also negotiate a cheaper mortgage. Remember: a high score shows that you’re a low-risk borrower.
Landing a jobA good credit score may help you secure a job offer. In Canada, if you’re applying for a role as a civil servant or in the financial services industry, you may be required to pass a credit check.

How do I get (or maintain) a good credit score?

Whether you’re working to improve your score or trying to maintain your already flawless record, there are certain habits you should develop to keep your score up.

Keep paying your bills on time

Your payment history is one of the biggest factors TransUnion and Equifax evaluate when they calculate your score. If you’ve got good credit, you probably already make prompt payments on all your bills. Ensure you’re always on time by setting up automatic payments and using phone or calendar reminders.

Watch your credit utilization ratio

Your credit utilization ratio is how much credit card debt you have relative to how high your credit limit is. If you’ve got a good credit score, you’ve likely managed to keep this ratio low. Don’t max out your debts or dramatically increase this ratio — credit reporting agencies like to know you have flexibility if something goes wrong.

Don’t cancel credit cards

This is tied to your credit history and your credit utilization ratio. Every time you cancel a credit card, your ratio goes up because you just lowered the maximum amount of borrowing room you have relative to your debt. The credit history associated with the cancelled card will also be removed from your credit report. Only sign up for credit cards you need to help avoid these problems.

Use the right financial products

Good credit opens up the door to all the best products, so you don’t have to settle for credit cards or loans with high interest rates; your score is your negotiating power. Keep improving your number by actively using your credit card and paying off your bills every month.