How Your Loans and Spending Habits Are Quietly Shaping Your Credit Score

Team Gill • April 10, 2026

Your credit score is one of the most important numbers in your financial life — especially when it comes to getting a mortgage. But for most Canadians, how that number actually gets calculated remains a bit of a mystery.

Here's what you need to know.

What Is a Credit Score, Exactly?

A credit score in Canada ranges between 300 and 900 points. It's considered a predictor of how likely you are to pay your debt on time, and it directly affects a lender's decisions on loans, interest rates, and credit limits. The higher your score, the better.

In Canada, Equifax and TransUnion are the two primary organizations that collect data on consumer borrowing and provide credit scores to lenders. While both use similar inputs, their algorithms can differ — which is why your score may vary slightly depending on which bureau a lender checks.

Not All Loans Are Created Equal

You might assume that carrying a mortgage, a car loan, and a credit card all affect your score the same way. They don't.

Revolving credit products — like credit cards or a line of credit — can carry a higher influence on your credit score because they provide more insight into how you manage credit on a day-to-day basis. If you're regularly carrying a high balance or missing payments, that gets noticed quickly.

Instalment loans, such as auto loans, personal loans, or student loans, show your ability to manage a fixed scheduled payment. A mortgage, on the other hand, demonstrates your capacity to manage long-term balance repayment. Each type of credit tells lenders something different about your financial behaviour.

The Factors That Matter Most

Here's a breakdown of what actually moves your credit score:

1. Payment History

The biggest impact on your credit score comes from payment history — whether you're paying on time, and how long any bills have gone unpaid. Even one missed payment can leave a mark.

2. Total Amount Owed

This includes the total you owe across all creditors, how much you owe on specific types of accounts, and how much of your available credit you've used.

3. Credit Utilization

Your debt-to-credit utilization ratio — the amount you're borrowing compared to your total credit limit — matters significantly. Keeping that ratio below 30 to 40 per cent will help your score.

4. Length of Credit History

How long you've had credit products plays a role in your score calculation. This includes the age of your oldest account, your newest account, and the average age of all accounts. Closing old accounts can unintentionally lower your score.

5. Credit Inquiries

A credit inquiry for a new credit card or auto loan stays on your profile for six years. Checking your own score or getting a pre-approval doesn't affect your score — and when shopping for a mortgage, multiple inquiries are typically treated as a single event.

6. Unused Credit

Having a large amount of unused credit available can also negatively affect your score. Even if you don't owe anything on a $50,000 line of credit, a lender still has to factor in the fact that you have the capacity to take on that debt.

What This Means Before You Apply for a Mortgage

Your credit score doesn't just determine whether you're approved — it directly impacts the interest rate you're offered. A stronger score can mean thousands of dollars in savings over the life of your mortgage.

If you're planning to buy, renew, or refinance, it's worth taking a close look at your credit picture well in advance. Small changes — like paying down a credit card balance or avoiding new credit applications — can make a real difference in where your score lands when it counts.

Not sure where to start? Reach out — reviewing your financial profile before you apply is part of how we help you get the best possible outcome.

Have questions about your mortgage options? Get in touch today.

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Mick & Sheila Gill
CANADIAN MORTGAGE EXPERTS
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