What is the minimum credit score for credit card approval?
Find out about minimum eligibility requirements and learn how to turn back the clock if your credit score is impacting your financial health.
If you’re looking to buy your first home, lease a new vehicle or take out a second credit card, you should know how your credit score will affect your application. We’ll help you learn about credit scores in Canada, as well as what you should watch out for and who to contact if you want to find out more about your personal score.
Credit score requirements
Credit scores in Canada range from 300 to 900 points, but most credit bureaus say a decent score starts at around 650. Anything above this number should qualify you for a standard loan or credit card, while anything below might cause you headaches when it comes to taking advantage of credit. Where you sit on the scale will determine your general ability to qualify for lending or credit requests.
- 720 to 900: You have excellent credit and should have very few problems getting a credit card, loan or mortgage.
- 650 to 720: You have good credit but may not be eligible for the lowest interest rates.
- 600 to 649: You have fair credit, but may need to build up your score before you can take advantage of some forms of credit.
- 300 to 599: Your credit needs work, but you can potentially qualify for credit builder programs.
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What cards can I get if I have poor or fair credit?
If you’re sitting below 650 on this scale, there are many things you can do to help build up your credit rating and some forms of credit that you’ll still be eligible for in the meantime.
- Secured credit cards. For this type of card, you’ll need to put down a deposit. This becomes your credit limit and is used to secure the balance on your account. If you default on your payments, the bank can use your deposit to pay off your outstanding balance. Otherwise, you’ll get it back when you close down your account.
- Low-interest credit cards. These cards let you save money on interest rates. This can come in handy if you’re struggling to pay off your principal balance because most of your payments are going towards interest.
- Prepaid credit cards. If you want to spend only what you put down on your card, you can try a prepaid card. The only issue with these cards is your payments aren’t reported to the credit bureaus, so they won’t help you to rebuild your credit. The upside is just about anyone can qualify, so you’ll still be able to access the benefits of having a credit card, like being able to make purchases online.
- Store credit cards. Some department store cards have more-relaxed requirements and may not even check your credit score. Even though these cards may seem like a good option, it’s important to note they often come with higher interest rates and fees.
- Credit builder cards. These cards are designed for those who want to rebuild their credit. They typically offer lower interest rates and report all of your on-time payments to the credit bureau. Every time they report a payment, you get another notch added to your credit score.
If you can’t qualify for a card and you need money for an emergency, you might want to consider asking a friend or family member for help or consider a short term personal loan. If you’re really struggling, the next step might be to look into a credit counselling program which can help you consolidate your debt and get your head back above water.
How to improve your credit score
- Use credit often. It might seem counterintuitive, but the more you use your card the faster you can build up your score, so long as you keep up with payments.
- Make payments on time. Your payment history accounts for roughly 35% of your credit score so it’s important to be consistent.
- Pay your balance off each month. Pay your balance off in full every month to improve your score and save money on interest.
- Mix up your credit types. Make on-time payments on a variety of debts, including credit cards, mortgages, loans and leases.
- Avoid applying for too much credit. Make sure you only apply for credit you absolutely need, since every credit check on your account will drag down your score.
- Keep a low balance on multiple cards. Avoid consolidating your debts onto one card because it can max out your limit and damage your score.
- Don’t cancel old credit cards. Instead of cancelling a card you no longer want, you should freeze your account but keep it open. This maintains your total credit amount and the length of your credit history.
- Correct errors in your credit report. Contact the credit bureau if you notice an error on your report and ask it to fix it.
How to get your credit score?
Checking your credit score is the first step to improving your credit, since it will give you an idea of where you stand. It’s also important to find out what your credit score is to avoid rejected applications which can lower your score. The process for applying for your credit score can be done online or through the mail and you shouldn’t have to pay a fee.
- Choose which credit bureau you want to use. Canadian credit scores are calculated by two major credit bureaus: Equifax and TransUnion. You can apply using their websites.
- Fill out a request to obtain your credit score. You’ll need to fill out some personal information, including your full name, address and previous addresses held in the last three to five years. Make sure to provide proof of your current address.
- Provide proof of identity. The credit bureau will need you to supply a photocopy of two pieces of government-issued ID, including driver’s licence, health card, birth certificate, passport or bank statement.
- Choose delivery method. The most common way to receive your credit score is by mail. You can also request to see your score online for a fee. If you live in Eastern Canada, you may be able to visit a credit bureau in person.
Understanding your credit score can give you a leg up when it comes to improving your credit situation. It can also help ease the stress of applying for new credit when the time comes, since you’ll know whether or not you’ll be able to qualify.