Last updated on March 26, 2024.

If you’ve ever been in a relationship, you probably know that love often isn’t blind – unike the premise behind the Netflix dating show my wife and I recently binged. Love Is Blind puts potential lovebirds into pods where they can get to know one another without actually seeing each other. The only problem? Many factors really do matter when it comes to choosing a mate — including financial stability, and yes, even borrowing power.  

In the most recent season of the show, bad credit became the inevitable dealbreaker. And I could relate: before my wife and I combined our finances, I was concerned about what I was bringing to the table financially — including a less-than-stellar credit score. 

Turns out that feeling isn’t so unique. A recent survey by Equifax Canada revealed 52% of respondents were anxious about their personal debt levels, especially as economic factors like inflation have led to many people relying more heavily on credit to cover their expenses. And yet, 32% of the Canadians surveyed never check their credit reports. 

Your credit score is more than just a number. Think of it as a financial passport that can open doors to better opportunities, such as approval on a mortgage or a car loan.

Building a good credit score is an essential part of having access to credit when it’s needed. But how do you start to build a credit score in Canada? And how do you check your progress? Here’s a handy guide to scoring high in the credit department. 

But first, what is a credit score? 

First things first, a credit score is a three-digit number that reflects your creditworthiness. In other words, it indicates how likely a bank or private lender would be to lend you money. In Canada, credit scores typically range from 300 to 900. The higher your score, the better your financial reputation, which gives you easier access to loans or lower interest rate credit cards.

Let’s say you just moved to Canada. Or you’re getting your first credit card. Your credit score will begin accumulating when you’ve made your first payment on the card. The credit bureau is updated monthly, so it will take a month for your credit score to appear. If you miss that first payment, your credit score might start off in the negative. Making a minimum payment can help to get you back on track.   

I vividly remember navigating credit issues as a newbie. My wife had been building her credit for years before I even got my credit card. Plus, she had also paid off a few student loans, pumping up her credit score even further. I just tried to remain patient and positive, and was mindful of paying my card on time so that my score could grow through healthy use. And it did, eventually.   

The lesson I learned the hard way was that the earlier you establish a credit rating, the better.

The lesson I learned the hard way was that the earlier you establish a credit rating, the better. You can improve your credit score by either making a payment within the first month of acquiring a new credit card or by consistently making at least the minimum payment each month. This will allow time for your credit score to increase, says Anita, a team manager for cardholder care at Vancity. Anita recommends obtaining credit as soon as you meet the minimum requirements to do so. Then you can work on building it up over time. 

Why a good credit score is important. 

Your credit score is more than just a number. Think of it as a financial passport that can open doors to better opportunities, such as approval on a mortgage or a car loan. Anita says that “your credit score is a snapshot of your credit history that allows lenders a clear view in assessing how much credit you qualify for based on how you’ve managed previous and existing loans.” 

Rental agencies and landlords often check your credit score as if they were border guards swiping your passport.

4 key ways to build your credit score. 

Have you ever anticipated a dreamy trip only to remember that your passport had expired? Bad credit can feel like that – without a solid credit score, it’s much tougher to reach goals such as home or car purchases.  

But even if your credit isn’t where you want it to be now, that doesn’t mean it will be like that forever. There are a variety of strategies you can use to build up your credit over time. Here are four basics you can start with: 

• Make your bill payments on time: Financial institutions update the credit bureau monthly with new information. This means that each month is an opportunity to build up your credit score a little more. One of the key factors those institutions look at is payment history. This is often demonstrated by your ability to maintain payments on your loans and credit cards. It is possible to recover from a negative credit score over time by making at least a minimum payment (or the agreed-upon amount) on time.  

• Keep your credit lines to a minimum: It’s also important to make credit applications sparingly. as a hard credit check does affect your score. Experts suggest that you should try not to seek relationships with various new lenders at the same time.  

• Consider how much credit you use: Another key factor is credit utilization. Having large balances close to or exceeding your credit limit can have negative impacts, Anita warns. “It’s a good idea to keep balances at less than 30 percent of the maximum approved limit.”  

• Spend within your means: It’s all about staying within your means and not going over your limit. While increasing your credit limit can be great for those who manage their spending and payments well, it’s also essential to make sure your limit isn’t so low that it’s pushing up your utilization rate. Be sure to only accept credit limit increases when you feel confident you can stay within your means.  

A few things that are unique for Canadian credit builders.

There are some unique aspects to consider as you build a credit score in Canada. According to Anita, most Canadians are not aware that our two main credit bureaus, Equifax and Transunion, offer free credit reports, though they do charge for some types of reports and services.  

Requesting a credit report is a good way to not only ensure you’re on track to building your credit score, but also to protect against personal misinformation and potentially fraudulent credit applications in your name. “Having awareness about what these reports contain will allow you to promptly take action and deal with any incorrect information,” Anita says. “Discrepancies can lead to unwanted delays when you’re dealing with a lending process. And with identity theft on the rise, it’s important to be vigilant and avoid what can become an extremely challenging process to resolve.” 

Choose the right credit products.  

Some Canadian financial institutions have credit products and services that can also help in building your credit score. Vancity, for example, has products to assist those who need to establish their credit history or repair low credit scores. With Vancity’s enviro™ Secured Visa* card, cardholders who may not have qualified for other cards have the chance to not only gain credit but also work toward building a better credit score.  

Don’t be afraid to ask for help, too, if you need a hand in navigating strategies to build your credit credit score. A professional credit counsellor can offer customized guidance, while non-profit services such as those offered through the Credit Counselling Society are generally free of charge. 

Of course, building credit will always be a work in progress. “It’s a lifelong journey,” Anita points out. And unlike that aforementioned Netflix dating show, you should always go into it with eyes wide open. 

_{enviro™, Carbon Counter™ and Vancity enviroFund™ are trademarks of Vancouver City Savings Credit Union.} 

_{* Trademark of Visa Int. Used under license.}