Independent · Canadian rules and data only

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    Credit

    What Is Credit in Canada?

    Credit can feel big and confusing, especially if nobody ever explained it to you. This guide starts at the beginning and keeps it simple.

    Quick Answer

    is your ability to borrow money, or to buy something now and pay for it later. In Canada, credit bureaus such as Equifax Canada and TransUnion Canada keep a record of how you use credit. That record is your . A is a three-digit number taken from your report, usually between 300 and 900. A higher score is better. Checking your own report or score does not lower it.

    means borrowing money, or using a product, on the promise that you will pay it back, usually with interest if you do not pay in full. Common types of credit in Canada include credit cards, personal loans, lines of credit, retail store cards and mortgages. When you use credit, you create : the amount you owe. Using credit is not bad on its own. What matters is how you use it.

    is the permission or ability to borrow. is what you actually owe right now. For example, a credit card with a $2,000 limit and a $0 balance gives you credit but no debt. Spend $500 on it and you have $500 of debt.

    A is a summary of how you have used in the past. Credit bureaus create one when you first borrow money or apply for credit, and they update it at least once a month. A report usually includes personal details (such as your name, date of birth, addresses and employers), your credit accounts, payments that were missed or returned, debts sent to collection agencies, bankruptcies or court decisions, and the businesses that checked your credit in the last 3 years. For each account it shows when you opened it, how much you owe, and whether you paid on time.

    A is a three-digit number based on your . It shows how likely you are to repay borrowed money. It usually ranges from 300 to 900, and a higher score is better. It goes up with on-time payments and responsible use of , and it goes down with missed payments or too much . Bureaus and lenders use different formulas and do not share the details, so the score you see may differ from the score a lender uses.

    The Financial Consumer Agency of Canada groups the main influences into two parts. Your : how long you have had and how long each account has been on your report, the types of credit you use, debts sent to , and any or insolvency. Your credit habits: whether you carry a balance on your credit cards, miss payments, how much total you owe, how close you are to your , and how often you apply for new credit.

    Banks and unions, credit card companies, car-leasing companies, phone and internet providers, utility companies, insurers, governments, employers and landlords can all use credit reports in some situations, for example to decide whether to lend to you, what to offer, whether to rent you a home, or whether to hire you. In most provinces a business must get your consent before it checks your credit. In Nova Scotia, Prince Edward Island and Saskatchewan, it only has to tell you.

    It depends on the type of information. For example, late or unpaid credit cards and loans stay for up to 6 years, and a consumer proposal is removed 3 years after you pay off the included debts or 6 years after you sign it, whichever comes first. Bureaus and provinces can differ, so see our guide on how long negative information stays on a credit report.

    You can get your credit report free from Equifax Canada and TransUnion Canada, online, by mail or by phone. Equifax offers a free score online in every province and territory. TransUnion offers a free score online only if you live in Quebec or Ontario. Checking your own report or score does not affect your credit. Before you give your personal information to any company that offers reports or scores, make sure it is legitimate and read its privacy policy.

    Frequently Asked Questions

    is the ability to borrow money, or buy now and pay later. When you use it, you create you have to repay, often with interest if you do not pay in full.

    No. is the borrowing itself. Your records how you have used it, and your is a three-digit number taken from that report.

    Scores usually range from 300 to 900, and a higher score is better. There is no single official scale for what counts as good, because bureaus and lenders use different formulas. If you are applying for , ask the lender what it looks for.

    No. The Financial Consumer Agency of Canada says checking your own or score does not affect your rating.

    bureaus create a report when you first borrow money or apply for credit. If you have never done either, you may not have one yet.

    Banks, unions, credit card companies, phone and utility providers, insurers, landlords, some employers and governments can use it in certain situations. In most provinces they need your consent.

    What to do now

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      How credit scores work in Canada
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      Free credit report in Canada
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    Educational only, not financial advice.