Skip to main content

What is a Credit Score?

Credit bureaus calculate your credit score by using the information in your credit report, which they compare with people like you. Credit scores typically range from 300 and 900. People with high credit scores regularly pay their bills by the due date and have been paying their bills on time for years.

Lenders use your credit score as a signal to decide if you are a good credit risk. People with high credit scores usually find it easier to get a new credit card or loan and pay lower interest rates. Each credit bureau calculates your credit score using its own formula – so you may have several different credit scores that banks and credit card companies use. Your score may rise or fall over time depending on your credit behaviour.

Credit bureaus need about six months of activity to generate your credit score and use information like your payment history, outstanding amounts, unused credit, and types of credit you use in their models.

Here are our top three tips on how to improve your credit score:

  • Pay your bills on time, all the time. Past due payments, collections and bankruptcies have the most serious negative effects on your credit score.
  • Keep your account balances below 35% of your available credit. For example, if you have a credit card with a $2,000 limit, try to keep the outstanding balance below $700.
  • Check your credit report often. If you spot an error, contact the credit reporting agency to learn how to correct inaccurate information.