How healthy is your credit score? Unless you’re planning to apply for a mortgage, car loan, or another form of credit, it’s easy to forget about your credit rating—especially if you reliably pay your bills. You may assume your score is solid. That assumption can be misleading. Many people are surprised to learn their credit score isn’t as strong as they thought.
A credit score ranges from roughly 300 to 900 and is built from several factors. Debt counsellor Brian Betz of Money Mentors in Calgary explains that while payment history is the largest piece—about 35%—other elements matter, too. The primary components of a credit score are:
- 35% payment history
- 30% credit utilization (how much of your available credit you use)
- 15% length of credit history
- 10% recent credit inquiries
- 10% the mix and types of credit you hold
Score ranges are commonly described like this: 800 and above is excellent, 720–799 is very good, 650–719 is good, 600–649 is fair, and anything from 300–599 is considered poor by most lenders. Staying on top of the lesser-known factors can prevent unpleasant surprises—such as being denied a car loan or mortgage, or being offered higher interest rates because your credit is only so-so.
Below are six common ways people unintentionally damage their credit score, and practical steps to improve it.
1. You’re using too much of your available credit
After on-time payments, credit utilization is the next most important factor. It measures the percentage of your total available credit that you’re using and accounts for about 30% of your score. High balances relative to your limits—especially if you’re only making minimum payments—tell lenders you may rely on credit too heavily.
How to fix it: Prioritize paying down revolving balances. Identify small monthly expenses you can cut—like subscription services—and redirect that money toward credit card payments. Even modest extra payments every month reduce utilization and can improve your score over time. Set up automatic transfers from your bank to ensure the extra payments actually happen.
2. You don’t have a long enough credit history
Lenders prefer applicants with a demonstrable track record of managing credit, which contributes about 15% to your score. Credit history begins the first time you open a credit account, such as a phone contract or credit card. Closing older accounts can shorten your overall history and hurt your score unexpectedly.
How to fix it: Keep your oldest credit account open, even if you rarely use it. If a newer card offers better rewards or lower fees, use that one more often but make occasional small charges on the older card so it remains active. That preserves the length of your credit history without forcing you to rely on the older card for day-to-day spending.
3. You avoid credit cards entirely
Some people avoid credit cards out of fear of debt. Ironically, not using credit at all can make it harder to qualify for loans, rent an apartment, or build a solid credit profile. Lenders need evidence that you can manage credit responsibly.
How to fix it: Consider a low-limit credit card—$500 to $1,000—and use it for one recurring, affordable bill, such as a phone or streaming subscription. Automate the payment so bills are paid on time and the card helps build a positive payment history without encouraging overspending.
4. You’ve made too many credit applications recently
About 10% of your score is influenced by recent credit inquiries. Multiple hard checks—applications for loans, credit cards, or financing—within a short period signal potential financial stress. Some exceptions exist, such as when rate-shopping for a mortgage or auto loan, where multiple inquiries in a short window are often treated as a single shopping event.
How to fix it: Avoid applying for credit unless you really need it. Use online pre-qualification tools that perform soft checks (which don’t affect your score) to assess your chances before submitting formal applications. Don’t accept store credit offers on impulse just to get a discount at checkout.
5. Your credit mix is limited
Lenders like to see a variety of credit types—credit cards, a mortgage, an auto loan, or a line of credit—because different account types show you can handle multiple forms of borrowing. The diversity of accounts makes up about 10% of your score.
How to fix it: If your credit profile consists only of credit cards, consider adding a modest line of credit or another form of installment debt if it makes sense for your situation. Diversifying your credit responsibly can strengthen your overall profile.
6. You don’t have a credit card from a major bank
Not all cards carry the same weight. Cards from large, established banks are often viewed as more reliable by credit bureaus than store-branded cards or small-issuer products. Because major banks typically have stricter underwriting, holding one of their cards can boost your credibility with lenders.
How to fix it: If possible, open a credit card with a major bank. These cards can help improve your score more quickly than some store cards, provided you use them responsibly and pay on time.
Where can you check your credit score in Canada?
You can obtain your credit report and score through Canada’s two main credit bureaus, Equifax and TransUnion. In addition, several third-party services and apps provide free credit score updates and educational tools—examples include Borrowell, Mogo, ClearScore and Credit Karma. Regularly reviewing your report helps you spot errors and monitor changes that affect your credit rating.
Further reading on credit ratings
- Worried about your credit rating? Avoid these 5 credit card mistakes
- Credit scores and credit reports: What newcomers to Canada need to know
- Could a line of credit impact my mortgage application?
- How to calculate your debt-to-income ratio—and why you should know this number