Improving your credit score takes a bit of time. But the good news is that you can work your way to a better score with a few good habits and tweaks.

If you’re working on getting your financial house in order, or you’re gearing up for that big purchase, a good credit score may mean lenders see you as lower risk when you apply. Whatever your reasoning, learning what impacts your credit score and how to improve it can benefit your overall financial well-being. So, let’s dive in.

Why should I build my credit score?

Finding out you have a good credit score is kind of like getting a really good report card. Your credit score is a 3-digit number that banks and other financial institutions use to evaluate your creditworthiness and how likely you are to pay back debt.

If you have a good credit score, you may be offered better interest rates and lower charges on credit card balances and loans, though lenders also weigh your income, existing borrowing and whether the repayments are affordable. Having a good credit score (660-724+) can help you save more in the long run on the financial products and services we all need and use. That’s why it’s essential to start by building your credit score.

What counts as a good credit score in Canada?

Credit scores in Canada generally run from 300 to 900, and the bands below are an illustrative guide rather than a standard every lender follows. There is no universal five-band system: Equifax and TransUnion describe ranges differently, and each lender sets its own cut-offs. Even so, where you sit broadly matters more than the exact number, because approval rules tend to be set by range rather than by individual points. Here's how the ranges break down and what each one typically unlocks.

Why your Equifax and TransUnion scores differ

Canada has two credit bureaus, and they rarely hold identical information. Not every lender reports to both, and those that do may report on different dates in the month. Each bureau also uses its own scoring model, so the same file can produce a different number depending on who is doing the maths. A gap of 20 to 50 points between your two scores is completely normal and doesn't mean either one is wrong.

Is 620 a lower credit score?

A score of 620 isn't poor - it sits in the fair band, which means you're borrowable but not yet in the cheapest tier. In practice, you may still be eligible for a fair number of products, though you're likely to be quoted higher interest than someone at 700, and approval and terms always rest on the lender's own checks. Some prime lenders set their cut-off at 660, so 620 can also mean a decline where a slightly higher score would have been an approval.

How far apart are the bands?

Roughly 100 points separates poor from good, and another 100 separates good from excellent. That sounds like a lot, but the gap between fair and good is often only 40 points - which is well within reach of a few months of on-time payments and a lower credit utilisation ratio. If you're close to a band boundary, small improvements can have an outsized effect on the offers you're shown.

How do I start building my credit score?

Using a credit card is a great way to quickly build up your credit score in Canada and good credit history. Most credit card providers report your balance and payments to Canada’s credit bureaus, Equifax and TransUnion, on a roughly monthly cycle - but not every lender reports to both bureaus, and reporting dates vary from one provider to the next. So, when you use your credit card and make your payments on time in full, you’re actually helping to improve your credit score.

If you’re just starting out, are a newcomer, or someone with little to no credit history, it may be difficult to get an unsecured credit card. Some providers have strict requirements about what credit score or yearly income applicants need to apply. But, some providers in Canada offer special secured credit cards designed specifically for young people or newcomers where no credit history is needed to apply. So if you’re without a credit history, you can seek out a secured credit card or a newcomer program.

What helps improve my credit score?

Now that you know why it’s important to start building your credit history and score, we can talk about improving it. The truth is there are many different factors that can increase your credit score.

If you’re wondering where to get your free credit score in Canada, you can check yours in minutes with ClearScore. Once you start to monitor your credit score, you can do the following things to help improve it.

Pay down revolving account balances

Many Canadians don’t know what credit utilization is, but it’s one of the biggest influences on your score - often described as accounting for roughly 30%, though the exact weighting is a general guideline that varies by bureau and scoring model. Your credit utilization is based on two numbers - the total amount of available credit that you’re using compared to the total amount of credit that’s available to you.

Let’s say you owe $3,000 on your credit card and your limit on that card is $10,000. Since you’ve used 30% of the total amount of credit available to you, your credit utilization in this example would be 30%. Keeping your utilisation below around 30% is often considered helpful, though the effect varies by scoring model and your circumstances.

Learn more about how your credit limit can affect your score.

Don’t miss payments

Another way to help increase your credit score is to have a long history of paying your credit card bills on time. Your payment history typically carries more weight than any other category - commonly cited as around 35% of your score, although the precise weighting depends on the scoring model Equifax or TransUnion is using - so it’s crucial that you pay your bills on time.

If you can’t make a bill payment, or you forgot, lenders generally report the account in escalating stages - 30, 60 and 90 days past due - before eventually writing the balance off as uncollectible and passing it to collections. There is no single national cut-off for that write-off: the point at which it happens varies by creditor and by product. It’s critical to pay your bills on time or at least be aware that you’re late. Unpaid and late bills will negatively impact your credit score, and chronically missed payments could lead to higher interest rates, late fees, penalties, reduced credit limits, and even court judgements.

A great way to combat missing bill payments is by setting up automatic bill payments and setting reminders on your phone.

Reconcile past due payments

If you are behind on paying your bills, making them current is a great start to improving your credit score. A late payment can generally remain on your credit report for up to six years (which we'll get into later). So making sure all of your accounts are current can be good for your credit score and stops further late payments from being added to your credit history and additional late fees. If you’re having trouble with credit card debt, you could try speaking with a credit counsellor to negotiate lower payments and interest rates and bring your accounts current.

Limit how often you apply for new credit

Anytime you apply for new credit, the financial institution will check your credit, otherwise known as a credit inquiry. A “hard” credit inquiry can slightly lower your score, whereas a “soft” credit check (like when checking your free credit score with ClearScore) has no impact.

Try to be mindful of how much new credit you apply for and the number of credit card accounts you have. If you apply for new cards, make sure you don’t do so too frequently, as this behaviour may look irresponsible to creditors.

What damages your credit score the most?

The biggest killer of credit scores is a missed payment that's allowed to escalate. Not every negative mark carries the same weight, though, and knowing the pecking order tells you where to put your energy first. Here are the things that hurt a Canadian credit file, ranked from most damaging to least.

• Missed and defaulted payments. Payment history is 35% of your score - more than any other factor. A single payment reported 30 days late can pull a good score down sharply, and the damage deepens at 60, 90 and 150 days. This is the single most destructive thing you can do to a healthy file.

• Accounts sent to collections. When a lender gives up and sells your debt, a collection item lands on your report and stays for six years from the date of first delinquency (typically when the account went to collection), not from the date you last paid it. It signals to every future lender that the account was never resolved by you, and it's one of the hardest marks to recover from while it's still showing.

• A consumer proposal or bankruptcy. These are the heaviest public-record marks available. A bankruptcy sits on your report for six years from discharge - up to 14 years for a second one - and a consumer proposal typically remains for three years after completion. Both effectively close the door on prime lending until they age off.

• Maxed-out or persistently high credit utilisation. Credit utilisation is about 30% of your score. Running a card at or near its limit month after month can weigh heavily on your score, even if you never miss a payment, because it reads as dependence on borrowed money.

• A cluster of hard inquiries in a short window. One hard check is a minor dent of a few points. Five or six inside a couple of months looks like someone scrambling for credit, and lenders treat that pattern as a warning sign regardless of whether the applications were approved.

• Closing your oldest credit card. Length of credit history feeds your score, and closing your longest-standing account shortens your average account age while simultaneously removing its limit from your available credit - pushing your utilisation up as a side effect. It's a self-inflicted double hit.

• Having no credit history at all. A thin file isn't a black mark, but it produces the same outcome as a bad one: lenders have nothing to assess, so they decline or price for the worst case. Newcomers and young Canadians often find this is what's holding them back rather than anything they've done wrong.

The useful distinction is between what you can fix quickly and what you simply have to outlast. High credit utilisation, a cluster of inquiries and a thin file can shift within a few months - for example as balances come down, new applications ease off, or a thin file is gradually built up. Collections, bankruptcies and defaults are different: paying them off stops the bleeding and looks far better to a manual underwriter, but the mark itself only disappears when its reporting period expires.

How long does it take to improve my credit score?

The length of time to improve your credit score will depend on the type of marks on your credit report, like past due payments, and when those items fall off your report. Derogatory marks like collections or bankruptcies can last up to seven years on your report. It’s a good idea to thoroughly review your credit report to ensure there aren't any errors or discrepancies.

If you do spot an error, it’s best to dispute it with the credit bureaus. For example, you might check your report and see a mark that indicates you didn’t make a payment when you actually did. When you’ve submitted your dispute, Equifax and TransUnion aim to investigate and respond within about 15 to 30 days, contacting the creditor to verify the information. More complicated cases - or ones you need to escalate to the lender or a provincial regulator - can take longer.

With good habits and some work, you could be able to see some score improvement in up to six months.

How long does each credit-building action take to show up on your score?

How long it takes for your credit score to go up depends entirely on which lever you pull. Some actions register within a single billing cycle; others take years to work through. This table sets out the realistic timeline for each of the main credit-building moves available to Canadians.

Notice the floor running through every row: roughly 30 days. Lenders report to Equifax and TransUnion on a monthly cycle, usually tied to your statement date, so nothing you do today can reach your credit file before that next report goes out. That's why claims about transforming your score in a week don't hold up - the reporting infrastructure simply doesn't move that fast. Plan in monthly increments, keep the good habits consistent across at least two or three cycles, and you'll see meaningful movement.

How long do collections stay on my credit report?

If you have a late payment that’s past due, the original lender may eventually sell the account to a collections agency. A collection item will generally stay on your credit report for six years from the date of first delinquency - the point the account originally went into default - not from the date you last paid it. Unpaid collections are removed from your credit report after six years - but it’s highly recommended you pay back any debt in collections, as this type of mark can significantly impact your credit score.

Learn more about which debts you should pay off first to improve your credit score.

How long do bankruptcies stay on my credit report?

Your credit report will show if you’ve ever filed for bankruptcy, which forgives debt that you can’t pay back but offers creditors a chance to obtain some measure of repayment based on your available assets.

A bankruptcy will usually stay on your credit report for six to seven years from the date of discharge, depending on your province and which bureau is reporting - TransUnion retains it for seven years in some provinces. If you’ve filed for bankruptcy twice (known as a double bankruptcy) it will stay on your credit report for up to 14 years.

How long will a default stay on my credit report?

The length of time that unpaid debts remain on your credit report will vary based on the province where you reside. In British Columbia, Alberta, Saskatchewan, Ontario, and New Brunswick, defaults for unsecured debt typically stay on a credit report for two years.

In Quebec, unsecured debt will remain on a credit report for three years, while Manitoba, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador will retain this kind of debt on a credit report for six years.

How do I get incorrect items which are negatively impacting my credit score off my credit report?

The first step to eliminating marks on your credit history is to request a copy of your report and review each section carefully. If you see an error that could impact your credit score, you can contact Equifax or Transunion to formally start a dispute claim online or by mail.

You can also file a dispute directly with the lender by contacting them directly. You can do this by writing a detailed dispute letter to your creditors that outlines each mistake and a request asking the credit agencies to correct the inaccuracies.

Credit score improvement: frequently asked questions

Can you really get a 700 credit score in 30 days?

Only in one specific scenario: if you're already close to 700 and you pay down a maxed-out credit card before your statement date. Lower credit utilisation is the one change that can shift a score meaningfully within a single reporting cycle. If you're starting from the fair or poor bands, 30 days isn't enough - there's only one round of bureau reporting in that window, and no single action can carry you across two score bands. Anyone promising a 700 score in a month regardless of your starting point is selling something.

How long does it take to build a credit score from 500 to 700?

Typically 12 to 24 months. The pace depends on what's dragging the score down. If the cause is high balances and a couple of recent late payments, consistent on-time payments plus reduced utilisation can get you there in about a year. If there's a collection or a bankruptcy on file, you're partly waiting for time to pass - those marks stay for six years - so expect the longer end of that range, with steady gains along the way rather than one jump.

Can errors on a credit report actually be reversed?

Yes. If a bureau can't verify a disputed item with the original creditor, it has to be corrected or removed. Once you file a dispute with Equifax or TransUnion, they have 30 days to contact the lender and investigate, though the full process can take up to six months in Canada. Send supporting evidence - statements, receipts, correspondence - with your dispute, as verified claims are resolved far more quickly than bare assertions.

Which credit bureau do Canadian lenders and car finance companies use?

It varies by lender and sometimes by province. Equifax is the more widely used of the two among Canadian banks and auto finance arms, including manufacturer finance companies, but many lenders pull from both or alternate depending on the product. Because your two files can differ, it's worth knowing both numbers before you apply for anything significant.

Does checking my own credit score lower it?

No. Checking your own score is a soft inquiry and has no effect whatsoever, no matter how often you do it. Only a hard inquiry - when a lender checks your file as part of an application - can nudge your score down, and then only slightly.

Will closing a credit card I don't use improve my score?

Usually not, and it often makes things worse. Closing a card removes its limit from your total available credit, which pushes your credit utilisation up. If it's your oldest account, you also shorten your average credit history. Unless the card carries an annual fee you can't justify or tempts you into overspending, it generally does more good sitting open with a zero balance.

Does paying off a collection remove it from my report?

No - it updates the entry to show as paid, but the item itself stays for six years from the date of first delinquency; paying it doesn't restart the clock or remove it early. That said, paying it is still worth doing. Lenders reviewing your file manually treat a settled collection very differently from an outstanding one, and it stops the account being pursued further.

Do credit repair companies work in Canada?

There's nothing a legitimate credit repair company can do that you can't do yourself for free. Disputing errors with the bureaus, negotiating with creditors and setting up a repayment plan are all available to you directly. Be wary of any firm promising to remove accurate negative information - that isn't possible. If you're struggling with debt, a non-profit credit counsellor is a better and cheaper starting point.

Check your credit score for free

While there’s no quick fix to securing an excellent credit score overnight, checking and monitoring your score can help you keep an eye on things and is a simple way to catch inaccuracies that may be negatively impacting your credit score.

Checking your credit score with ClearScore is a great way to gain insight into your financial well-being. Plus, you’ll get clear, personalized insights about your credit score and tips on how to improve it. By improving your credit score, you have a better chance of getting better credit offers and saving money.