Why did my credit score drop in Canada, and how do I find out?
You check your score and it is lower than last month. Nothing dramatic happened, so why? The good news is that the reason is almost always written down in your credit report.
The usual suspects
The Financial Consumer Agency of Canada (FCAC) says scores generally run from 300 to 900 and that a score can fall when you miss payments or carry too much debt. It also lists how close you are to your credit limit, how often you apply for new credit, debts sent to collections, and how long your accounts have been open. Here is what each one looks like in real life.
A higher balance compared with your limit
The FCAC lists how close you are to your credit limit as a factor, so a bigger balance can matter even when every payment is on time.
| Example (illustrative) | Last month | This month |
|---|---|---|
| Card limit | $3,000 | $3,000 |
| Balance reported | $300 | $2,400 |
| Share of limit used | 10% | 80% |
Nothing was missed, yet the card now uses 80% of its limit instead of 10%. Our guide on closing a card shows the same math from the other side.
A missed or late payment
Late or unpaid cards and loans can stay on your report for up to 6 years, so one slip can echo, even a small bill you did not realize was overdue.
New applications
When a lender checks your credit for a new application, that is a hard inquiry. The FCAC says it stays on your report for 3 years with Equifax and 6 years with TransUnion. Checking your own score is different and does not affect your rating.
Something that is not yours
A wrong balance or an account you do not recognize can pull a score down. See how to fix a mistake on your credit report.
How to find the cause for free
- Request your report from both Equifax and TransUnion. Both offer it free online, by mail or by phone.
- Look at what is new since last time: new accounts, new inquiries, a late flag, a balance that jumped.
- Compare balances with your limits.
- If something is wrong, dispute it with the bureau and the lender.
The two bureaus keep their own files, so the details and scores can differ. If you want to know what the ranges mean, see what a good score is in Canada.
What not to do
Do not open several new cards to "fix" it, and do not close your oldest account in a panic. Look first, then decide.
Looni is being built to scan your statements for hidden fees, forgotten subscriptions and junk charges, and show you what to fix first. Canadian-built, launching soon.