What Credit Score Is Considered Bad Credit in Canada?
Jul 8, 2026
What Credit Score Is Considered Bad Credit in Canada?
If you’ve ever checked your credit score and felt a wave of stress, embarrassment, or confusion, you’re not alone. Many Canadians worry about what their number actually means — and whether a lower score automatically shuts doors to financial opportunities. The good news is that understanding your credit score is the first step toward improving it, and no matter where you’re starting from, real solutions exist.
In Canada, credit scores below 560–600 are generally considered poor. That range signals a higher risk to lenders, which can make borrowing more difficult or expensive. But it does not mean your financial future is broken or beyond repair. With the right information and tools, you can rebuild.
This guide explains what a bad credit score is in Canada, what it means for your daily life, and the practical steps you can take to move forward with confidence.
Key Takeaways
Bad credit in Canada typically falls between 300 and 559
Scores below 600 are generally considered poor or high-risk
Bad credit can affect loans, rentals, utilities, and even employment screening
Bad credit is different from having no credit history
There are legitimate credit-building solutions for Canadians with poor credit
Understanding Credit Score Ranges in Canada
Canada uses two major credit bureaus: Equifax Canada and TransUnion Canada. Both generate credit scores on a scale of 300 to 900. Typically, scores below 600 are considered “bad” or poor credit scores.
Here’s how credit score ranges generally break down:
Credit Score Range | Rating | What It Means |
300–559 | Poor | Considered bad credit |
560–659 | Fair | Below average |
660–724 | Good | Acceptable to most lenders |
725–759 | Very Good | Strong borrower profile |
760–900 | Excellent |
What Does Bad Credit Mean for You?
Bad credit doesn’t just affect your ability to borrow money — it can shape everyday life in surprising ways.
Higher Interest Rates
If you’re approved for loans or credit cards, you’ll likely pay higher interest rates. For example, a car loan might cost thousands more over time due to higher interest rates.
Fewer Approval Options
Many mainstream banks decline applicants with poor credit, pushing borrowers toward specialty lenders or secured products.
Larger Security Deposits
Bad credit often results in:
Higher rental deposits
Utility service deposits
Cell phone plan deposits
Landlords and service providers use these deposits as protection against potential missed payments.
Limited Credit Card Choices
You may be denied for most premium and rewards-based credit cards. Instead, borrowers typically start with secured credit cards or high-fee rebuild cards.
Employment Challenges
Some employers — particularly in finance, government, or security-sensitive roles — may conduct credit checks. A poor credit score can sometimes impact hiring decisions.
While these challenges are real, they’re temporary. Credit scores change over time, and consistent positive habits can dramatically improve outcomes.
Common Reasons for Bad Credit Scores
Understanding what damages your credit helps you avoid repeating mistakes — and focus your energy on the actions that truly move your score in the right direction. In Canada, lenders rely heavily on patterns of behavior, not one-off slip-ups. That means consistent habits matter far more than perfection.
1. Late or Missed Payments (35% of your score)
Payment history is the single most important factor in your credit score. Even one missed payment can cause a noticeable drop — especially if your credit history is short or already strained.
In Canada, most lenders report payments to Equifax and TransUnion once your account becomes 30 days past due. That means missing a due date by just a few days won’t typically appear on your credit report, but once you cross that 30-day mark, the damage is done
2. High Credit Utilization
Credit utilization measures how much of your available credit you're using. Using more than 30% of your total limit signals a higher financial risk to lenders.
Example: If your total available credit is $1,000, aim to keep your balance below $300.
High utilization often hurts people with:
Low-limit credit cards
New secured cards
Retail store cards
Many Canadians unknowingly hurt their credit scores by carrying high balances on a single card, even if their overall debt is manageable. Lenders look at both total utilization and per-card utilization.
3. Collections and Charge-Offs
When an unpaid debt is sent to a collection agency or written off by the lender, it becomes one of the most damaging marks on your credit report. In Canada, collections and charge-offs typically remain on your credit file for up to six years, even after you repay them.
Why this hurts so much:
Collections signal that normal repayment efforts failed. Lenders interpret this as a breakdown in financial management, which makes them hesitant to extend new credit.
4. Bankruptcies and Consumer Proposals
Bankruptcies and consumer proposals stay on your credit file for 6–7 years and have a significant impact on borrowing options.
First bankruptcy: Removed 6–7 years after discharge
Consumer proposal: Typically removed 3 years after completion
Canada has one of the highest household debt levels globally, and consumer proposals are increasingly common. Many Canadians successfully rebuild credit during and after these processes.
5. Too Many Applications
Each time you apply for credit, a hard inquiry appears on your report. Multiple applications in a short time frame can lower your score and make lenders nervous. A surge of applications can signal financial stress, even if your income is stable.
In Canada, multiple mortgage or auto loan inquiries within a 14–45 day window count as one inquiry, allowing safe rate shopping. Credit cards, however, do not receive this grouping benefit.
6. Limited Credit History
Each time you apply for credit, a hard inquiry appears on your report. Multiple applications in a short time frame can lower your score and make lenders nervous..
7. Defaulted Loans
When a loan goes into default, it signals serious repayment difficulty to lenders. Defaults can remain on your credit report for up to six years and significantly lower your score, making it much harder to qualify for future credit at reasonable rates.
How to Check Your Credit Score in Canada
One of the most empowering financial habits you can build is regularly checking your credit score. Canadians can access their credit reports for free through:
Many Canadian banks also offer free monthly credit score access directly inside online banking apps. Importantly, checking your own credit does NOT lower your score. These checks are considered soft inquiries and do not affect credit scores.
The Government of Canada encourages Canadians to review credit reports regularly to detect fraud and errors.
Why checking matters
Identify mistakes early
Detect identity theft
Track improvement progress
Prepare for major financial decisions
Think of it like checking your map while navigating — it helps ensure you’re heading in the right direction.
Can You Still Get Credit with a Bad Credit Score?
Yes — absolutely. Canada has an entire category of financial products designed specifically for people rebuilding credit.
Secured Credit Cards
Secured cards require a refundable deposit that becomes your credit limit. They offer:
High approval odds
Minimal income verification
Monthly reporting to credit bureaus
Clear path to rebuilding
Example: A $300 deposit gives you a $300 limit. Responsible use builds a positive history.
Credit Builder Loans
Small installment loans are designed to help establish repayment history. Funds are often held in savings until the loan is paid off.
Guaranteed Approval Credit Cards (with caution)
Some cards offer near-guaranteed approval but often carry:
Higher annual fees
Higher interest rates
Lower limits
They can be helpful when terms are transparent and fair.
Alternative Lenders
Specialty lenders focus on higher-risk borrowers and offer flexible underwriting — though interest rates may be higher initially.
Steps to Improve Your Credit Score
Rebuilding credit is not about perfection — it’s about consistency. Small actions repeated over time create meaningful change.
Pay on time: Set up automatic minimum payments to avoid damaging late marks.
Keep utilization under 30%: Lower balances quickly improve your score.
Keep old accounts open: Longer credit history supports your rating.
Limit new applications: Too many hard inquiries can lower your score.
Dispute errors promptly: Report mistakes to Equifax or TransUnion.
Use a secured card wisely: Make small purchases and pay in full monthly to rebuild trust.
How long does improvement take?
Early improvement: 3–6 months
Meaningful progress: 6–12 months
Strong recovery: 12–24 months
Progress happens faster than most people expect when habits change.
Bad Credit vs No Credit: Know the Difference
Many Canadians confuse bad credit with no credit, but they’re very different situations.
Bad Credit
Negative marks exist
Late payments, collections, defaults
Lenders see documented risk
No Credit
No borrowing history
No positive or negative data
Lenders simply lack information
In most cases, bad credit is harder to overcome than no credit, because lenders prefer teaching responsible habits rather than retraining past mistakes.
A bad credit score doesn’t define your worth, intelligence, or financial future. It simply reflects past borrowing patterns — and patterns can be changed. Thousands of Canadians rebuild their credit every year. With the right tools, education, and patience, you can too.
If your score currently falls below 600, you’re not stuck — you’re simply at the beginning of a rebuilding journey. And every on-time payment, every reduced balance, and every smart financial decision moves you forward.
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About the authors
Dominic Abate
Dominic has worked in financial planning, banking and auto finance, and writes about all aspects of money. His work has appeared in Time, Success, USA Today, Credit Karma, NerdWallet, Wirecutter and more.