In Canada, two main credit bureaus calculate credit scores: Equifax and TransUnion. These agencies use popular scoring models like FICO and VantageScore, along with their own systems, to create your score. For instance, Equifax may use its Equifax Risk Score 2.0, while TransUnion might use its CreditVision model. These systems look at factors like your payment history and credit usage to give a score that lenders can use to judge your creditworthiness. It’s also important to know that lenders may see scores differently. They set their own standards for what they think is good or bad credit based on their approval rules.

Your credit score is shaped by five main elements. The most important thing is your payment history. This makes up about 35% of your score and shows how reliably you pay your bills. Next is credit utilization, which is the percentage of available credit you use. It is best to keep this below 30%. The length of your credit history also matters. Longer histories are viewed more positively. A mix of credit types, like credit cards and loans, can help your score. Limiting hard credit inquiries is also important, as they can cause short-term drops in your score.

Other factors can affect your financial behavior. While your income and job stability do not directly impact your score, losing a job can lead to missed payments. This would lower your score. Events like bankruptcy or consumer proposals can hurt your score directly. They can stay on your credit file for several years. This makes it harder to get credit or loans at good rates.