What a Credit Score Actually Measures

In Canada, two main credit bureaus, Equifax and TransUnion, compile your credit history and create your credit report and score. Your credit report summarizes how you have used credit. Your score is a three-digit number that comes from that report: it shows how likely you are to repay money you borrow. Scores usually range from 300 to 900, and a higher score is better (FCAC).

Lenders use your credit report and score to decide whether to lend you money and at what interest rate (FCAC). According to Equifax Canada, the score is only one of several pieces of information an organization uses to assess your creditworthiness. A low score can narrow your options and raise the cost of borrowing. Crédit Instant uses instant bank verification (IBV) rather than your credit score to assess an application: that is the idea behind the fast online loan.

Your score changes over time as lenders update your credit history. It goes up when you pay bills on time and use credit responsibly, and it goes down when you miss payments or carry too much debt (FCAC).

The Factors That Affect Your Score

Credit bureaus and lenders use different formulas to calculate your score, and they do not share the exact details (FCAC). The precise weight of each factor therefore varies from one model to another and cannot be guaranteed. These are the common factors:

Payment history

Paying your bills on time is the most important part of your credit score according to FCAC. Missed or late payments can lower it, and a strong payment history tells lenders that you repay reliably.

Credit utilization

Your credit utilization rate compares the credit you use with your credit limit. FCAC suggests trying to use less than 30% of your total limit: with a $5,000 limit and $1,000 used, the rate is 20%. A high rate can make you look like a higher risk, even if you pay your debts in full every month.

Credit history

Lenders want to see a long, stable credit history. Keeping your accounts open and active for a long time may improve your score. A new account lowers the average age of your accounts and may lower your score (FCAC, Equifax Canada).

Types of credit

You may have a lower score if you only have one type of credit product. It is better to have different types (a credit card, a car loan, a line of credit) and to manage them responsibly. Only borrow money you can pay back (FCAC).

New credit applications

When a lender checks your credit report, the bureau records an inquiry on your file. Many applications close together can make lenders think you urgently need credit or are spending beyond your means (FCAC).

No universal percentages

Equifax Canada and TransUnion Canada describe the same main factors. Equifax publishes an approximate breakdown but states that there are many scoring models; TransUnion only ranks the factors in approximate order of importance. Formulas change with the bureau, the lender and the scoring model. Focus instead on the habits below: pay on time, use only a small part of your limit, keep older accounts and limit applications.

Five Habits Recommended by FCAC

1

Pay on time

Always make your payments on time, and make at least the minimum payment if you cannot pay the full amount. Contact the lender right away if you think you will have trouble paying, and do not skip a payment even if you are disputing a charge. Your financial institution may also send you electronic alerts (payment due, available credit below a set amount).

2

Keep your credit utilization low

Try to use less than 30% of your total credit limit, do not go over your limit, and keep your monthly utilization rate low, even if you pay the full balance.

3

Keep your old accounts open

Closing an older account makes you lose older credit history and reduces your available credit. Consider keeping it open, even with a zero balance, if it has no annual fee, is easy to manage and can be used occasionally to keep it active.

4

Use different types of credit carefully

Lenders want to see that you can manage more than one type of credit responsibly. Only borrow money you are able to pay back: taking on too much debt can harm your score.

5

Limit how often you apply

Only apply for credit when you need it, and avoid sending several applications at once or too close together. When shopping for a car loan or a mortgage, get quotes from different lenders within a 2-week period: credit bureaus treat these as one inquiry.

What to Check on Your Equifax and TransUnion Report

Requesting your own credit report does not affect your score. According to FCAC, you can access your credit report online for free from Equifax and TransUnion, and it is recommended to get both so you can detect problems sooner. Check them regularly for errors and signs of fraud.

Accounts you don't recognize

An account you did not open may be a sign of identity theft or of someone applying for credit in your name. Examine it to make sure it is not fraud (FCAC).

Incorrect payment history

Check that no payment is marked late when you paid on time, and that your cards and loans show correct information (balance, limit, dates). Contact the lender concerned first, then the credit bureaus (FCAC).

Negative information kept too long

Bureaus may only keep negative information for a limited period (see the next section). If negative information still appears after the maximum time, report it (FCAC).

Lender inquiries you don't recognize

Your credit report may show inquiries from lenders who requested it in the last 3 years. If a lender is unfamiliar, check whether it is a forgotten application or a sign of fraud, and contact the lender and the credit bureaus if needed.

Mistakes That Can Hurt Your Score

Missing a payment

Late or missed payments can lower your score and stay on your report for years. If you cannot pay the full amount, make at least the minimum payment and contact the lender right away (FCAC).

Using almost all of your limit

With a $5,000 limit and $4,500 regularly owed, lenders may see you as a higher risk than someone who owes $1,000 each month (FCAC example). Never go over your limit.

Closing your oldest account

Closing an older account makes you lose credit history and reduces your available credit, which may hurt your score (FCAC). If the account has no annual fee, consider keeping it open.

Applying for credit too often

A large number of credit applications made too close together can tell lenders that you urgently need credit. Only apply for the credit you need.

Co-signing without understanding

According to FCAC, a joint borrower, also called a co-signer, becomes equally responsible for repaying the unpaid balance. Read the whole agreement before signing and make sure your budget can absorb that risk.

How Long Information Stays on Your Report

Here is how long credit bureaus may keep each type of information, according to FCAC. Periods vary by bureau and by province:

Positive information

At Equifax, accounts paid in full stay on your report as long as they are open, and closed accounts for up to 10 years. At TransUnion, information stays for up to 20 years, even if you close the account.

Late or unpaid payments

Information about late or unpaid credit cards and loans may stay on your report for up to 6 years.

Lender inquiries

Lender inquiries stay for 3 years at Equifax and 6 years at TransUnion.

Bankruptcy

Equifax and TransUnion usually remove a bankruptcy from your report 6 years after you are discharged. TransUnion removes it 7 years after discharge in some provinces, including Quebec.

Consumer proposal

Equifax and TransUnion remove a consumer proposal 3 years after you have paid off all the debts included in it, or 6 years after you sign it, whichever comes first.

Can a Loan Help Build Your Credit History?

According to FCAC, lenders send information about your credit accounts to the credit bureaus, and a strong payment history tells lenders that you repay reliably. A loan can therefore only add positive information to your credit report if the lender reports your payments to the bureaus. Not every lender does: ask before you sign.

For your information, the “Important information” section at the bottom of every page of this site states that Crédit Instant does not transmit your file to credit agencies such as Equifax or TransUnion. If your goal is to build your credit history, choose a product whose lender confirms in writing that it reports your payments to the bureaus.

In every case, only borrow what you can pay back: taking on too much debt can harm your score (FCAC), and a loan is not a substitute for the habits described above.

Sources consulted on September 29, 2026

The Equifax Canada and TransUnion Canada pages are in English.