Canadian Credit Health Trends – 2017

Steven HopeBlog

It’s been nearly a year since we began giving Canadians free credit scores. We’ve pulled almost 600,000 credit scores for over 200,000 users (if you don’t know your credit score, you can get it for free here). We’ve had a chance to look into data provided by our friends at Equifax to answer a question many of you have been asking.

Is my score any good? How does my score compare among the Canadian population?

Currently, the average credit score in Canada is 751* according to Equifax. Credit scores in Canada have remained relatively stable last year, with the average credit score only increasing by 2 points.

But how does your credit score compare to others in your province? Your age bracket? Explore our interactive graphs below to see how you compare.

Congrats Quebec! On average, residents of Quebec have the highest credit scores in Canada. There also seems to be a strong positive correlation between age and credit score. In general, the older you are, the better your credit score is! Not surprising as older individuals have longer credit histories. In fact, payment history is the largest determinant of your credit score.

Debt Trends in Canada

Credit scores are strongly tied to debt levels. In general, more debt = lower credit score. In fact, 30% of your credit score is determined by your credit utilization and credit balance.

Debt levels are on the rise. Canadians have taken on an additional $115 billion in debt since the third quarter of 2015. Worryingly, Canadians have been taking on more credit card debt. In fact, 45% of Canadian households increased their credit card balances, bringing the average credit card balance to $1,876, the highest level it’s been in 4 years.

Despite the increase in debt levels over the past year, credit scores in Canada have remained relatively stable.

Pay off your high-interest debt while improving your credit score

Consolidating your high-interest debt can not only save you thousands of dollars in interest payments, but it can also improve your credit score. Using a debt consolidation loan allows you to pay off your credit card balance, but does not count against your utilization.

For example, let’s say Mary has two credit cards, one from Bank A and another from Bank B. On her Bank A credit card, she has an outstanding balance of $5,500, with a credit limit of $6,000. On her Bank B credit card, she has an outstanding balance of $7,500, with a credit limit of $8,000.

Mary’s total credit utilization is equal to her total credit card balance divided by her total credit limit, which is 93%. Mary’s high credit utilization is more than likely hurting her credit score. In fact, 30% of your credit score depends on credit utilization.

Mary decides to take a $13,000 loan through Borrowell to consolidate her debt. She pays off the balances on both her Bank A and Bank B credit card, leaving her with 0% credit utilization. Not only does she save money from consolidating debt at a lower rate, she’s able to increase her credit score because of her reduced credit utilization 🙂 .

Credit Scores Myth Vs. Fact

How much do you know about credit scores in Canada? Take our quiz to test your credit score knowledge!

Credit Score Fact Vs. Myth

*The credit score provided by Borrowell is calculated by Equifax and is called the Equifax Risk Score 2.0 (ERS 2.0). To calculate your score, Equifax gathers credit information from your financial institutions (e.g. your payment history), phone and utility companies and use complex models using this information to produce credit scores.

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