Your credit score determines the rate you pay on every loan you ever take out.
Even a 50-point improvement can save you thousands of dollars over the life of a loan. Here's exactly how to get there.
Your credit score is one of the most financially consequential numbers in your life — yet most Canadians have only a vague idea of what it is, how it's calculated, and how to improve it. That's expensive ignorance. The difference between a 620 and a 720 credit score on a $20,000 personal loan can mean paying $3,000–$5,000 more in interest over the life of that loan.
The good news: credit scores are not fixed. They respond directly to your behaviour — and some actions can produce meaningful improvements in as little as 30–60 days. Others take months, but are just as important for building lasting financial health.
This guide breaks down exactly what moves your score, how fast each strategy works, and how a better score translates into better loan offers through Smarter Loans — where our technology matches you to 50+ Canadian lenders at the best available rate for your profile.
🎯 See What Your Score Could Unlock
Move the slider to your current score — then to your target — to see how your loan options change.
580Fair
What this score means for your loan options:
Est. Rate Range—
Lender Access—
Monthly Pmt on $15K / 36mo—
30–60Days to see improvement from fast-acting credit strategies
$4,800Avg. interest saved over 3 years by improving score from 620 → 720 on a $20K loan
35%Of your credit score is determined by payment history alone
50+Lenders on Smarter Loans — more lenders means better rates at every score level
How Credit Scores Are Calculated in Canada
Canadian credit scores run from 300 to 900 and are calculated by two bureaus: Equifax and TransUnion. While their exact formulas differ slightly, both weight the same five core factors. Understanding these factors tells you exactly where to focus your energy.
Payment History — 35%The single biggest factor. One missed payment can drop your score by 60–110 points.
Credit Utilization — 30%How much of your available revolving credit you're using. Keep it under 30% — ideally under 10%.
Length of Credit History — 15%Older accounts help. Don't close your oldest cards.
Credit Mix — 10%Having both revolving (cards) and instalment (loans) credit helps your score.
New Credit / Inquiries — 10%Multiple hard inquiries in a short period signal risk. Apply through Smarter Loans to avoid this.
10 Proven Ways to Improve Your Credit Score in Canada
Each action below is expandable — click to see exactly how to execute it and how long it takes to show results.
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1. Never Miss a Payment — Set Up AutopayImpacts payment history (35% of score)
⚡ Impact: 30–60 days▼
Payment history is the single largest factor in your score. One missed payment — even by a few days — can drop your score by 60–110 points and stay on your report for 6 years. The fix is simple: set up automatic minimum payments for every account. Even if you can't pay in full, the minimum payment keeps your record clean. Log into each account and enable autopay today — this one change alone can meaningfully lift your score within two billing cycles.
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2. Reduce Your Credit Card Utilization Below 30%Impacts utilization (30% of score) — fastest single improvement
⚡ Impact: Next billing cycle▼
If your credit cards are close to their limits, this is your fastest score lever. Credit utilization = your total balances ÷ your total credit limits. A ratio above 30% hurts your score significantly — above 60% is severely damaging. Pay down balances to get below 30% on each card and overall. If you can't pay down immediately, call your card issuer and request a credit limit increase (without spending more) — this improves your ratio instantly once the increase is processed.
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3. Check Your Credit Report for ErrorsErrors are more common than you'd think — disputing one can add 20–50 points
⚡ Impact: 30–45 days after dispute▼
You're entitled to a free credit report from both Equifax and TransUnion in Canada. Request them at equifax.ca and transunion.ca. Look for: accounts you didn't open, incorrect balances, payments marked late that were on time, or accounts that should have fallen off (most negative items drop off after 6–7 years). Dispute any error in writing — bureaus must investigate within 30 days. A corrected error can produce an immediate, significant score boost with no behavioural change required.
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4. Stop Applying for New Credit UnnecessarilyReduces hard inquiries (10% of score)
⚡ Impact: Immediate▼
Every time you apply for a new credit card, loan, or line of credit, the lender performs a hard inquiry that temporarily lowers your score by 5–10 points. Multiple inquiries in a short period signal financial distress to credit bureaus. Avoid applying for new credit products for 6–12 months while you're actively trying to improve your score. And when you do need a loan, use Smarter Loans — our matching technology lets you see real offers from 50+ lenders without triggering hard inquiries until you formally choose one.
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5. Don't Close Old Credit CardsProtects credit history length (15%) and utilization (30%)
📅 Impact: Prevents score drop immediately▼
Closing a credit card does two damaging things simultaneously: it shortens your average credit history age and reduces your total available credit (worsening utilization). Even if you're not using an old card, keep it open — just use it occasionally for a small purchase and pay it off. If it has an annual fee you want to avoid, call the issuer and ask to downgrade to a no-fee version rather than closing it entirely.
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6. Use a Secured Credit Card to Build CreditIdeal for those with no credit history or very poor credit
📅 Impact: 3–6 months▼
A secured credit card requires a cash deposit (typically $200–$500) that becomes your credit limit. It works like a regular card but with zero risk to the issuer — so approval is almost guaranteed. Use it for small, regular purchases (groceries, gas) and pay the full balance every month. The on-time payment history gets reported to Equifax and TransUnion and begins building your score immediately. Within 6–12 months of consistent use, most borrowers see meaningful improvements.
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7. Use a Credit-Builder LoanAdds instalment credit to your mix — available through Smarter Loans
📅 Impact: 6–12 months▼
Several lenders in the Smarter Loans network offer credit-builder loans specifically designed to establish or rebuild credit. You make fixed monthly payments which are reported to the credit bureaus — improving both your payment history and your credit mix. Some credit-builder loans don't even release the funds until the loan is paid off, making them essentially a forced savings product with a credit-building benefit. These are particularly effective for newcomers to Canada or those recovering from a financial setback.
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8. Pay Down Debt Strategically (Avalanche or Snowball)Reduces utilization and demonstrates responsible debt management
📅 Impact: 1–6 months▼
Two approaches: the avalanche method (pay off highest-interest debt first — saves the most money) and the snowball method (pay off smallest balance first — builds momentum and closes accounts). For credit score purposes, the avalanche often wins because it reduces your utilization on high-balance cards faster. If your goal is to consolidate and simplify simultaneously, consider a debt consolidation loan — which can improve your utilization instantly by converting revolving debt to instalment debt.
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9. Become an Authorized User on a Trusted AccountInherits the account's positive history — fast but requires trust
⚡ Impact: 1–2 billing cycles▼
If a parent, spouse, or trusted family member has a credit card with a long, clean payment history and low utilization, ask to be added as an authorized user. Their account history can appear on your credit report, instantly adding years of positive history and improving your utilization ratio. You don't need to actually use the card — just being listed as an authorized user transfers the benefit. Make absolutely sure the primary cardholder maintains their good habits; if they miss payments, it hurts you too.
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10. Time Your Credit Applications CarefullyBunching inquiries in a tight window limits score damage
🗓️ Impact: Strategic planning▼
If you need to apply for multiple credit products (e.g. a mortgage and a car loan), do them within a 14–45 day window. Canadian credit bureaus treat multiple inquiries for the same type of loan within this window as a single inquiry — recognising that rate shopping is responsible behaviour. Outside this window, each application counts separately. And for personal loans specifically, using Smarter Loans means you get matched to multiple lenders with just one soft inquiry — so you can compare real offers without the score damage of traditional shopping.
Already working on your score? See what you can access right now.
You don't have to wait for a perfect score. Smarter Loans matches you to lenders based on your actual profile — including specialist lenders for fair and poor credit. Apply once, see real offers from 50+ lenders, free.
Tell us about your situation and we'll generate a prioritised action plan tailored to where you are right now.
🗓️ Build Your Credit Improvement Plan
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Credit Score Myths Canadians Still Believe
❌ Myth: Checking your own score hurts it
✅ Truth: Soft inquiries never affect your score
Checking your own credit is a "soft inquiry" and has zero impact on your score. Only hard inquiries from lenders — triggered when you formally apply for credit — can affect your score.
❌ Myth: Carrying a small balance helps your score
✅ Truth: Paying in full every month is best
Carrying a balance does not improve your credit score — it just costs you interest. Paying your full balance monthly keeps utilization low and your score high, with no interest paid.
❌ Myth: Closing old cards improves your score
✅ Truth: Closing cards almost always hurts your score
Closing a card shortens your credit history and reduces available credit — both of which lower your score. Keep old accounts open, even if you rarely use them.
❌ Myth: Income affects your credit score
✅ Truth: Income is never part of your credit score
Your salary, employment status, and bank balance don't appear in credit score calculations. However, lenders do consider income separately when deciding how much to approve you for.
❌ Myth: You have just one credit score
✅ Truth: You have multiple scores that can differ
Equifax and TransUnion each calculate your score independently using slightly different models. Lenders may use either or both. Checking both bureaus gives you the full picture — and lets you spot bureau-specific errors.
❌ Myth: Bankruptcy clears everything permanently
✅ Truth: Bankruptcy falls off your report — usually in 6–7 years
A bankruptcy stays on your Equifax and TransUnion reports for 6–7 years from discharge (longer for repeat filings). After that, it no longer appears. Responsible credit-building in the meantime helps significantly.
How Your Credit Score Affects Loan Rates Through Smarter Loans
Improving your credit score doesn't just make you feel better about your finances — it directly translates into lower interest rates, smaller monthly payments, and thousands of dollars saved over the life of a loan.
Score Range
Rating
Est. Rate Range
Monthly Pmt ($15K / 36mo)
Total Interest Paid
760–900
Excellent
9.99%–11%
~$484
~$2,415
725–759
Very Good
12%–14%
~$499
~$2,964
660–724
Good
15%–19%
~$521
~$3,756
560–659
Fair
22%–29%
~$570
~$5,513
Under 560
Poor
32%–47%
~$640
~$8,040
💡 The takeaway: Moving from a Fair (600) to a Very Good (730) score on a $15,000 loan saves approximately $2,500–$3,000 in interest. For a $35,000 loan — common for debt consolidation or a major purchase — that difference approaches $7,000. Investing time in your credit score is one of the highest-return financial activities available to any Canadian.
Every point you improve is money you keep.
Whether your score is 580 or 780, Smarter Loans finds your best available rate from 50+ Canadian lenders. As your score improves, you'll always have access to better and better offers. Apply free — it takes 3 minutes and won't affect your credit to browse.
How fast can I realistically improve my credit score in Canada? ▼
The fastest improvements typically come from reducing credit card utilization (visible at your next billing cycle) and correcting credit report errors (30–45 days after filing a dispute). Consistent on-time payments start improving your history within 1–2 billing cycles. More structural improvements — like lengthening your credit history — take 12+ months. Realistically, a disciplined 90-day effort on utilization and errors can produce a 30–60 point improvement for many Canadians.
How do I check my credit score for free in Canada? ▼
Both Equifax Canada (equifax.ca) and TransUnion Canada (transunion.ca) offer free credit score and report access — checking your own score is a soft inquiry and never affects it. Several banking apps (Scotiabank, CIBC, etc.) also display your score for free. For a full credit report with detailed account history, you're entitled to one free report per year from each bureau by mail, or you can pay a small fee for instant online access.
How much does one missed payment hurt my credit score? ▼
A single missed payment — once it's reported to the bureau (typically after 30 days past due) — can drop your score by 60–110 points, depending on your current score and how clean your history is. Higher scores drop more dramatically because lenders view a payment miss as a significant anomaly. The missed payment stays on your report for 6 years in Canada, though its impact diminishes over time as positive history accumulates.
Does getting a personal loan hurt my credit score? ▼
Taking out a personal loan has a short-term negative effect (a hard inquiry, typically 5–10 points) but a medium to long-term positive effect. Adding an instalment loan improves your credit mix, and consistent on-time payments are reported every month and build your payment history. If you use the loan for debt consolidation, paying off revolving balances also dramatically improves your utilization ratio — which can outweigh the initial inquiry impact within 1–3 months.
Can I get a loan while I'm improving my credit score? ▼
Absolutely. You don't need a perfect score to access financing. Smarter Loans works with borrowers across all credit ranges, including fair (560+) and some poor credit situations. Our platform matches you to the lenders most likely to approve you at the best available rate for where you are right now — not where a bank thinks you should be. As your score improves over time, you can refinance into better rates.
The Bottom Line
Your credit score is not a life sentence — it's a living number that responds directly to your financial behaviour. With the right focus, most Canadians can see meaningful improvement in 60–90 days, and significant improvement over 6–12 months.
The most impactful moves are clear: never miss a payment (set up autopay today), reduce your credit card utilization below 30%, check your reports for errors, and avoid unnecessary credit applications. Everything else builds on that foundation.
And while you're working on your score, you don't have to wait to borrow. Smarter Loans matches Canadians across every credit range to the best available lender for their situation. Whether you're at 580 or 780, our technology finds your best rate from 50+ verified lenders — and as your score improves, better offers follow.
See what you qualify for today — whatever your score.
One application. 50+ lenders. The best available rate for your real credit profile. Free, fast, and no hard inquiry just to browse your options.
Vlad is the President and Co-Founder of Smarter Loans, Canada's original and largest loan comparison website. He is a passionate entrepreneur and business leader in the Canadian financial sector. He was selected as a 2019 Top 25 Leaders in Lending by the Canadian Lenders Association. Vlad is an author at Smarter Loans, and has been featured in publications like the Toronto Star and National Post, among others.
