What Credit Score Do I Need?

Both TransUnion and Equifax use a credit scoring system which gives you a number between 300 and 900. How both report these numbers differs slightly, however the higher your score the more likely you will be to qualify for credit at a good rate.

Equifax TransUnion
300-560 = Poor 300-599 = Very Poor
560-659 = Fair 600-699 = Poor
660-724 = Good 700-749 = Fair
729-759 = Very Good 750-800 = Good
760-900 = Excellent 801-900 = Very Good

It is not, however, necessary to chase the highest score. Perhaps all you want is an unsecured credit card for daily use (which you will now pay off every month). If this is the case, you will need to achieve a score above 560 (600 for TransUnion). Achieving this objective can happen very quickly, without needing to work hard to build a better credit score.

If, however, you plan to purchase a car or apply for a mortgage then you will need to build a better credit score. This will take time but can be achieved through the strategies we discuss in the next section.

Other things to know about your credit score:

  • It is up to each lender to decide on the lowest score you can have and still borrow money from them.
  • Lenders may also use your score to set your interest rate and credit limit.
  • Since 2008 the federal government requires you have a minimum credit score of 600 to qualify for mortgage insurance.
  • In Ontario, and some other provinces, insurers may use credit scores underwriting your home insurance, which may affect your premium, but it’s illegal to use credit scores for underwriting auto insurance.

While they are very important, credit scores are usually not the only thing a lender will look at. Often, they will also consider other factors, such as your income, job or any assets you own when underwriting your credit application.