What actually moves a credit score
A credit score is a summary of how you have handled credit, built from the information in your credit report. The Financial Consumer Agency of Canada publishes consumer guidance on credit reports and scores, and it is a useful starting point before you try to change anything. Two national bureaus operate in Canada, Equifax Canada and TransUnion Canada, and each keeps its own file on you, so the score one bureau shows you can differ from the other on the same day.
Scores respond to recorded behaviour, not to intentions. The items that show up in a file include whether payments arrived on time, how much of your available revolving credit you are using, how long your accounts have been open, the mix of credit you hold, and how often you have applied for new credit. A score is a snapshot, so a single good month changes very little, while a consistent pattern over several months changes more.
Two limits are worth remembering. A score is a summary of one file at one bureau, not a verdict on your finances. And correcting a file takes longer than most people expect, which is why the useful question is not how do I fix this quickly but what do I want the file to look like in six months.
Steps that tend to help
- Get both reports and read every line. The Financial Consumer Agency of Canada explains how to request your report from each bureau. Look for accounts you do not recognise, balances that are wrong, payments marked late that you made on time, and duplicate entries.
- Dispute errors in writing. A dispute is about accuracy, not about how old an item is. Send supporting documents and keep copies of everything you send.
- Bring anything past due up to date. Recent missed payments carry more weight than old ones, and the file keeps recording new misses for as long as they continue.
- Automate at least the minimum payment. A missed minimum is recorded whether or not you intended to pay.
- Reduce revolving balances relative to your limits. Paying down a card that sits near its limit usually does more for a file than opening a new product.
- Think before closing old accounts. Closing an account you have held for a long time can shorten your recorded history, and it removes available credit from the calculation if you still carry balances elsewhere.
- Space out new applications. Several applications inside a short window look different on a file than one application you researched first.
- Keep accounts active but light. An unused account that is closed for inactivity can stop reporting, while occasional small use keeps it visible.
None of this works the same way for everyone. What helps depends on what is already in your file, and for decisions that matter you should get guidance from a regulated professional rather than relying on a guide.
What does not move a score, or moves it less than people hope
Several things people do for their score have no effect at all, and a few have the opposite effect.
- Checking your own report or score. Requesting your own file is treated differently from a lender asking about you, and it does not count against you.
- Paying off a collection. Paying a debt you owe is the right thing to do and it updates the balance, but a collection is not deleted because it was paid. How long it remains depends on record-keeping rules and bureau practice.
- Closing a maxed-out card. The balance history stays; what changes is your available credit.
- Earning more. Income is not part of the credit report used to build a score, even though it matters a great deal in a lender's own affordability checks.
- Using a debit card. Debit activity is not reported as credit.
- Utility and telecom payments. Whether these appear at all depends on the provider and the bureau. Where they are not reported, they cannot help a score.
A consumer proposal or a bankruptcy is a different category. Only a licensed insolvency trustee can administer either one, and each has a defined life on the credit report, covered below.
How long negative information stays on a credit report
Timelines matter because a score cannot recover fully while a serious item is still reporting. The two firm figures below come from the insolvency framework; other items vary.
| Item | How long it stays on the credit report |
|---|---|
| Consumer proposal | 3 years after completion, or 6 years from the date of filing, whichever comes first |
| First bankruptcy | 6 years after discharge |
| Late payments, collections, inquiries and other items | Timelines differ by item and by bureau. We are not going to publish a number we cannot verify, so ask the bureau that holds your file. |
Notice what the first two rows have in common: the clock starts at an event, not at the moment you decide to fix things. That is why the order of operations matters. Building on-time payment history now is what you can control while an older item runs out its time.
Getting a loan on bad credit: what changes and what does not
A weak file changes who will consider you and what borrowing costs. It does not change the fact that lending in Canada is regulated. Lending is licensed provincially, so the regulator and the rules differ depending on where you live, and consumer complaints about federally regulated financial institutions go to the Financial Consumer Agency of Canada.
If you are getting a loan on bad credit, expect the lender to look at the whole picture: how recent the problem was, whether it is still ongoing, what your income and existing obligations look like, and whether security or a co-signer is available. An unsecured loan with bad credit history is priced for the risk the lender sees, which is why the same application can produce very different offers from different lenders. A loan on poor credit is not automatically impossible, but it is usually more expensive, and a declined application still leaves a record on the file.
The lowest rates are only available to the most qualified applicants. That sentence is worth reading twice if you are comparing offers, because the headline number in an advertisement is rarely the number a particular applicant is offered. No lender is obliged to lend to you at any published rate.
Two federal rules set the outer edge of cost. The Criminal Code criminal rate of interest is 35% per year under section 347. Payday lending sits in its own framework: where a province operates a licensed payday lending regime, the federal Payday Lending Regulations cap the cost of borrowing at $14 per $100 advanced, and some provinces set a cap lower than that, in which case the lower cap applies. A payday loan is generally up to $1,500 for a term of 62 days or less. Quebec does not license payday lending, which effectively prohibits the model there. Payday borrowing can also appear in your file and be weighed by later lenders, so it is not a neutral way to build history.
If you own property, secured borrowing follows its own rules rather than a payday-style cap. At federally regulated lenders, a home equity line of credit is generally limited to 65% of appraised property value, with total secured lending usually capped at 80%. On the mortgage side, federally regulated lenders generally work to a total debt service ratio ceiling of about 44%, and qualify an uninsured mortgage at the greater of the contract rate plus 2 percentage points and 5.25% under OSFI Guideline B-20. Canadian fixed-rate mortgages are compounded semi-annually by law. The Bank of Canada publishes the policy interest rate, the prime rate, conventional mortgage rates and Government of Canada benchmark bond yields, but these are benchmarks rather than offers, and no lender has to lend at them.
loanmoose.ca is not a lender and does not make credit decisions. It is a matching and comparison service that connects consumers with lenders, and any offer, rate or approval decision comes from the lender, not from us.
Checks to run before you apply anywhere
- Confirm what is actually in both files, not what you remember.
- Write down every account, balance and limit so you can see your own picture in one place.
- Decide whether you are applying for a need or applying for a score, because the two goals often pull in different directions.
- Ask what the total cost of borrowing is, including fees, rather than focusing on the interest rate alone.
- Check which regulator supervises the lender for your province, since that is where a complaint would go.
- Ask whether a co-signer or security is required, and what happens to that person if you fall behind.
- Ask which bureau the lender reports to, and whether it reports at all, because an account that is not reported cannot help your file.
- If you are already in a consumer proposal or bankruptcy, ask your licensed insolvency trustee how new credit interacts with the arrangement before you apply.
A realistic way to think about timing
Score improvement is a slow input and a slow output. New information has to be reported by a lender, and then it has to age. Meanwhile, older negative items run on their own clocks, and the only two clocks this guide states as fact are the consumer proposal and first bankruptcy timelines above. If someone offers you a method to remove accurate information faster than those clocks allow, that is a reason to ask questions rather than a reason to pay.