Numbers play a significant part in our lives. We use them every day—from the ever-reliable alarm clock you pound every morning at 6 a.m., to your car’s license plate, to the hours you clock in at work. They’re the digits you dial on your phone and the quantity of followers you have on your social media account.

But there are some significant figures that have a greater impact on your life, particularly your finances. One of these is your credit score—the three-digit number that is the highlight of an annual credit report. It combines your spending and borrowing habits to inform lenders about your ability to pay all your financial obligations. This is summed up into three important digits and one adjective to describe your standing.

In Canada, credit scores are a reflection of the populace’s credit worthiness. While it may vary from city to city and even from one province to another, knowing the average credit score gives you an insight as to how well Canadians manage their finances and how they utilize this number to further or decrease their opportunities. The average also gives a standard to measure your own credit score and to make certain adjustments to conform or even exceed the norm. You can read this article on credit scores to give you additional insight on how these ratings are determined and impact your finances. Below are some more details about the role of credit scores in your life.

Canadian Credit Scores

Credit scores in Canada range from 300–900. This is calculated by two credit bureaus—TransUnion and Equifax. While they may have their specific formula to produce a credit score, the ranges and descriptions are generally the same. Scores are rated as:

Excellent: 760–900
Very Good: 726–759
Good: 660–725
Fair: 560–659
Poor: 300–559

As seen in the list above, higher credit scores are better. Having good to excellent ratings indicate that you manage your finances well. This commendable score opens up numerous financial opportunities such as loans and credit products that you can avail now or in the future.

How are They Calculated?

The two credit bureaus employ separate formulas that can yield two different scores, but they generally have the same criteria to come up with those three digits. They both consider:

Payment History (35%): Do you pay on time or do you fall behind due dates?
Credit Utilization (30%): Do you max out your credit or stay within 30% of your limits?
Credit History (15%): Since when did you obtain credit? How long are your credit accounts?
Credit Mix (10%): How many lines of credit or credit cards do you have?
Application Frequency (10%): How often do lenders pull up your record?

The information for these categories is based on your credit card statements, mortgage payments, and other financial transactions that you undertake throughout the year. Financial institutions such as credit card collectors and banks send their respective reports to either credit bureau and sum it up as your credit score.

Where Do I Get My Credit Score?

Aside from Equifax and TransUnion, Canadian banks such as BMO (via mobile app), CIBC, RBC, Scotiabank and TD furnish their clients with credit scores. If you’re not connected to them, you can use third-party services companies that offer free calculations.

Now that you know your rating, you may wonder how yours compare with other Canadians. Does it rank higher or lower? Or is it just the average? Here’s some figures that sum up the mean credit scores of Canadians.

What is the Average Credit Score in Canada?

According to TransUnion, most Canadians have a credit rating within the good category, around the number 650. This shows that Canadians on the average do well in managing credits and debts. It also turns out that average credit scores in Canada varies with age, city and province. Aside from demographics, financial conditions such as income and debt levels can also influence average credit scores across Canada.

Here’s some of the average credit scores in Canada:

By Age

According to a study conducted by Equifax in 2018, the average credit scores vary by age. College-level adults have the lowest average credit scores. This comes as no surprise since they generally have no or a shorter credit history than older adults. Students can remedy this as they take on sensible steps towards building their credit and eventually repayment history. Adults ages 65 and older registered very high average of 750, given their extensive credit history and financial experience they built over time.

By City

The following Canadian cities fall more or less into the national credit score average:

Vancouver: 687
Toronto: 679
Quebec City: 676
John’s: 664
Calgary: 650
Regina: 642
Winnipeg: 638
Halifax: 638
Charlottetown: 636
Fredericton:628

It appears that the statistics are evenly spread above and below the national average. Four key cities score higher than the 650 average while four cities rank below it. Halifax and Winnipeg even share the same credit score average. This could show that, on average, residents in Canadian cities have good to fair credit scores.

By Province

Average credit scores also vary by province. Quebec lists the highest number of residents with a score above 750 while Nunavut has the greatest number of people with scores way below the national average at 520. The reason behind this disparity is that territories in Canada offer different financial opportunities and some may even encounter greater challenges as opposed to those who live in another area. It appears that credit scores are affected by job offers and placement, cost of living, housing and debt.

By Income

Credit scores have a direct relationship with income. In Canada, higher pay equals better credit scores. An increase results in an increment in the other. For example, those earning $25,000 CAD and lower have 640 as their average credit score while those at the other end of the spectrum of $150,000–300,000 CAD have a mean credit rating of 788. This goes to show that greater income allows greater flexibility and allotment for debt repayment.

What Does the Average Credit Score Mean?

This number has an impact on how well you can access a host of financial services. Good credit scores are tied to more variable loan types and repayment options, as well as lower interest rates. The reverse is also true, as bad credit scores can limit your borrowing capability. You may get approved for certain types of loans, but you would need to pay higher interests. Banks may not be as accommodating that you would need to find other ways to obtain loans with bad credit.

Striving for a Better Credit Score

The average credit score for Canada gives us an idea of a general rating. However, there are instances when your credit score can be different from the usual. If you find yours at the higher end of the spectrum, then good for you. Your financial strategies surely work and you have no reason to worry.

But for those whose credit score falls lower than the national average or those nowhere near the good category, there are several recourses. Tips on how to improve your credit score include:

Checking your credit score for inconsistencies and possible scenarios of identity theft
Withholding credit card purchases
Prompt payment of balances
Establishing communication with creditors
Paying off debt
Seek professional help when necessary

Doing all these takes considerable time and effort, but it will benefit you in the long run. If you prioritize payments and curb your spending, your credit score will surely improve in the coming years. Keep in mind that credit scores can build up over time and you need patience to make sure it becomes favorable in the coming years.

Conclusion

Credit scores are important indicators of one’s credibility. It informs financial institutions of your ability to pay off obligations. It also provides insight on how well you manage debts and how you choose to spend your hard-earned money.

Credit scores also indicate how well a certain population manages their finances. In Canada’s case, it appears that its citizens have sound financial judgement. This is reflected in their mean scores and good credit score rating. This trend is a combination of various factors such as demographics, age and income. It appears that Canadians gain greater financial security as they mature and earn better. In the same line the presence of a variety of financial opportunities or the lack of it can contribute to citizens’ ability to attain credit worthiness. Those who have are able to obtain various financial products and credit can easily obtain average credit scores or higher.

But the law of averages also offers a glaring contrast with regards to cities or territories that do not meet the mean credit scores. Those who fall below these numbers may be suffering from financial hurdles. These challenges can be diminished by encouraging financial literacy to vulnerable populations and in giving them with various opportunities to improve not just their credit score but their over-all finances in the long run.