Build your Canadian credit understanding.

A credit report records credit activity. FCAC identifies Equifax and TransUnion as Canada’s two main credit bureaus and explains that lenders and bureaus use different scoring formulas. The score you see may differ from one a lender uses. A labelled score band on a comparison site is not a universal approval threshold.

Keep three questions apart: Is the reported information correct? What does the number you are viewing represent? What other requirements does the lender apply? This guide does not compute a score, recommend a lender or tell you that a particular product will be available after a fixed number of months.

FCAC provides links for free online credit reports from both bureaus, with information updated monthly. Checking your own report or score does not damage your credit rating. A credit report and a score are different products, so read a service’s terms before accepting a subscription to obtain one.

Check names, account details, balances, payments and inquiries. Keep a dated note of anything you do not recognize, then use the bureau’s and reporting organization’s official correction channels. Protect the reports as sensitive documents. Do not upload them, identity documents or account numbers to BankingCanada’s email or educational tools.

FCAC identifies payment history as the most important credit-score factor. Pay on time, make at least the required minimum if you cannot pay the full amount, and contact the lender promptly if a payment will be difficult. Setting a reminder helps only if the money and a workable payment method are there when needed.

Write down statement dates, due dates and the account that will fund payments. An automatic-payment setting is worth checking after the first cycle and when an account changes. Budget for what you owe before a reward or possible credit-limit increase. Taking on a new loan just to create a mix of credit can add costs and obligations you do not need.

Credit use compares an amount owing with available credit. FCAC suggests keeping total use below 30%, but that guideline is not a guaranteed approval line or an instruction to borrow up to it. A current app balance and the figure later reported can differ. Ask the issuer how and when it reports rather than assuming a single date works for every card.

The fictional table below has $400 on a $1,000 limit and $300 on a $3,000 limit. The combined $700 divided by $4,000 is 17.5%; the individual figures are 40% and 10%. Do not average 40% and 10% to get the combined percentage. The example shows why the totals and the individual accounts answer different arithmetic questions. It does not assign a score impact.

A secured card may be an option for someone with limited or damaged credit, but it requires a security deposit and may involve setup or annual fees. FCAC explains that the deposit and credit limit are not necessarily identical. Read the application and agreement instead of assuming “secured” means no fees, automatic approval or automatic graduation to another card.

Ask who holds the deposit, what happens if payments are missed, how account reporting works and how closure and deposit return are handled. Keep enough room in your budget for the deposit as well as the purchases you must repay. A prepaid spending card and a credit card are different products; confirm what is actually being offered.

FCAC states that purchases by an additional cardholder or authorized user do not help that person build credit history. The primary account holder is responsible for the account. Being an additional user is different from applying jointly as a co-borrower, which creates its own responsibilities.

Do not join someone else’s account because an online tip promises an easy score increase. Ask the issuer to explain the exact role, liability, access and reporting before agreeing. Likewise, check the actual Canadian bureau coverage, fees and conditions of any rent-reporting or credit-building service before paying for it. No such service receives an endorsement here.

Make payments, check reports for errors and revisit whether each account remains useful and affordable. A calendar reminder is a task reminder, not a forecast that a score will improve by that date. There is no automatic instruction in this guide to apply for a second card after six months, request repeated limit increases or keep an unsuitable account open.

Before a new application, ask what check will be made and consider whether the borrowing is needed. For SIN requests, distinguish legal income-reporting requirements from identification: Service Canada says a SIN is not an identity document and is not required for every credit transaction. Use the lender’s secure process and ask why information is requested.