For millions of Canadians navigating the housing market, financing a vehicle, or simply trying to qualify for a better interest rate, the credit score remains one of the most consequential — and least understood — numbers in their financial lives.
Ranging from 300 to 900 points, a credit score is used by lenders to gauge how reliably a borrower is likely to repay their debts. The higher the number, the more favourably a consumer appears to financial institutions when applying for loans, credit limits, or mortgage approvals.
But not all credit products are created equal in the eyes of the scoring algorithm — and understanding the difference could help Canadians make smarter financial decisions.
The Algorithm Behind the Number
In Canada, two major credit bureaus — Equifax and TransUnion — collect consumer borrowing data and supply credit scores to lenders. How those scores are calculated, however, is not static.
"It's really about what data goes into them and the algorithm, in terms of how they calculate credit scores," said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada.
Oakes noted that the scoring models evolve alongside the financial marketplace. Twenty years ago, mortgage data was relatively scarce and older scoring models sometimes excluded it entirely. Today, most credit scores incorporate mortgage repayment history as a standard input.
"It evolves as more data becomes available or new products come into the marketplace," Oakes said.
Credit Mix Matters — But Not as Much as You Think
One common misconception is that holding a diverse array of credit products — a mortgage, a car loan, and a credit card, for instance — dramatically boosts a person's score. While a healthy credit mix does carry some weight, experts say it is far from the dominant factor.
Matt Fabian, director of financial services research and consulting at TransUnion Canada, said the credit product mix typically accounts for only around 10 per cent of an overall credit score.
"A diverse, well-managed mix helps but it doesn't compensate for late payments," Fabian said.
In other words, holding multiple credit products while missing payments will do far more damage than having a limited credit mix with a spotless payment record.
Revolving Credit: A Window Into Daily Behaviour
Among the various types of credit, revolving products — such as credit cards and personal lines of credit — tend to carry a higher influence on a credit score than instalment loans like mortgages or car financing.
Oakes explained that this is because revolving credit gives lenders a more granular view of how a consumer manages money on a day-to-day or week-to-week basis. A mortgage payment comes once a month; a credit card balance fluctuates constantly, offering a richer dataset for scoring models to analyse.
For Calgarians and Albertans keeping a close eye on housing affordability, this distinction is particularly relevant. While a mortgage is often the largest debt a person carries, it may not be the product most actively shaping a credit score at any given moment — the credit card used for groceries or utility bills could have an equally significant impact.
What Actually Moves the Needle
Fabian emphasised that individual borrowing behaviour — not the type of loan held — is the more powerful driver of credit score movement. Consistent on-time payments, keeping credit card balances well below their limits, and avoiding excessive new credit applications are among the most reliable ways to build or maintain a strong score.
For Albertans planning major financial decisions — whether purchasing a home or financing a vehicle — understanding these mechanics ahead of time can mean the difference between a favourable rate and a costly one.
Source: Canadian Mortgage Trends. Original reporting by Ritika Dubey, The Canadian Press.