You may be unsure of the significance of your credit score if it is 625. A 625 credit score is within the range that is typically regarded as a fair to decent credit score, according to Equifax Canada, one of the two major credit bureaus in the nation (organizations that issue credit scores).
So, what does that mean really for your financial status and future? Let’s break it all down.
So, you’ve got a credit score of 625 and you’re wondering if that’s good or bad? Well in Canada a 625 credit score falls into the “fair to decent” category, according to Equifax Canada, one of the country’s two major credit bureaus. But what does that actually mean for your financial future?
Let’s break it down:
Credit Score Range in Canada:
- 300-579: Poor
- 580-669: Fair
- 670-739: Good
- 740-799: Very Good
- 800-900: Excellent
Your 625 credit score sits just below the “good” range. It’s not terrible, but there’s definitely room for improvement.
Why is a good credit score important?
A good credit score opens doors to better financial opportunities:
- Lower interest rates on loans: This saves you money in the long run.
- Improved employment opportunities: Some employers check credit scores during background checks.
- Increased likelihood of securing a rental property: Landlords often consider credit scores when evaluating potential tenants.
Factors that can negatively impact your credit score:
- Late or missed payments: This is a big one! Aim to always pay your bills on time.
- High credit utilization ratio: This means you’re using a large portion of your available credit. Try to keep it below 30%.
- Negative credit events: Bankruptcy, collections, and other negative entries can hurt your score.
- Credit inquiries: Hard inquiries, which occur when you apply for new credit, can temporarily lower your score.
How to improve your 625 credit score:
- Make timely payments: This is the single most important factor.
- Reduce credit card balances: Aim for a low credit utilization ratio.
- Limit new credit applications: Avoid applying for too much credit in a short period.
- Become an authorized user: This can help build your credit history.
- Use a credit building tool: Consider options like KOHO’s Credit Building.
Remember, building credit is a marathon, not a sprint. Although it takes time and work, you can raise your credit score and get access to better financial opportunities if you adopt consistent good habits.
Here are some additional resources to help you on your credit journey:
- KOHO Credit Building: https://www.koho.ca/credit-building/
- Equifax Canada: https://www.equifax.ca/
- TransUnion Canada: https://www.transunion.ca/
- Government of Canada Credit Report and Score Basics: https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score.html
If you need specific advice, don’t be afraid to contact a financial advisor or credit counselor. They can assist you in creating a strategy to raise your credit score and accomplish your financial objectives.
Now go forth and conquer your credit goals!
Late or missed payments
This is a big one. Any financial obligation, including credit card debt, can suffer greatly from nonpayment of loans, as it can negatively affect your credit score. A substantial 35% of your credit score hinges on your capacity to consistently meet your loan obligations. Therefore, its crucial to scrutinize your credit history for any past instances of missed payments.
Equifax categorizes credit scores as follows:
- Scores ranging from 300 to 579 are classified as poor.
- Scores ranging from 580 to 669 are categorized as fair.
- Scores ranging from 670 to 739 are considered good.
- Scores between 740 and 799 are thought to be extremely good.
- Scores ranging from 800 to 900 are deemed excellent.
Determining your score’s location on this range is essential for assessing your financial situation and possible eligibility for different financial opportunities and products.
The average credit score in Canada, according to TransUnion, is 650. A credit score of 625 indicates that you fall just short of what is regarded as a good score. There is room for improvement but it is also far from a terrible score. When trying to raise their credit score, 625 is frequently the starting point that people aim for. Generally speaking, people view scores above 600 favorably and scores below 600 less favorably. Furthermore, there are still ways to raise your score and maintain it at this high level even at this high score level.
A 625 credit score is below the national average in each of these cities, as you can see, indicating that work and improvement are still needed. Even though you strive to keep your score high, there are a number of reasons why it may fluctuate, such as many of these scores.
How to build a good credit score in Canada (especially as newcomer)
FAQ
Can I get approved with a 625 credit score?
What’s a perfect credit score in Canada?
Is a 620 credit score bad in Canada?
What is considered a bad credit score in Canada?
What is a good credit score in Canada?
Credit scores in Canada are three-digit numbers that range from 300-900, and are rated from Poor to Excellent. Credit score ranges in Canada vary based on the entity providing the score, but in general, they’re described as: Poor, Fair, Good, Very Good and Excellent.
Is 850 a good credit score in Canada?
In Canada, 850 is an excellent credit score. If your credit score is at this level, congratulations! You’re doing exceptionally well in managing your finances and credit. What is the highest credit score in Canada? The highest possible credit score in Canada is 900. Is it possible to reach this score?
How does a credit score work in Canada?
Using financial data collected by Canada’s two credit bureaus, Equifax and TransUnion, along with complex algorithms and scoring models, credit scoring companies are able to assign you a credit score. This number serves as an important tool for financial companies to assess whether to approve you for a loan or line of credit.
What is a good credit score for Equifax?
For Equifax, poor credit starts below 560, fair credit is 560 to 660, good is 660 to 724, very good is considered 725 to 759 and 760 and up is marked as excellent. Equifax also helps predict your credit worthiness for prospective lenders. Here’s how Equifax’s credit assessment breaks down into a credit score: 35% – Your payment history.