The Ultimate Guide to Canadian Business Credit Scores (2024)

Credit scores, especially ones related to your business, can be quite confusing. There are all sorts of different measurements and risks involved and not enough reliable information out there to guide you. We have created this guide to help you understand, improve and take advantage of your good credit score.

Credit is an important part of your business and personal financial status. Having a great credit score will help you become more credible in the eyes of lenders. That’s why it’s quite important to know what a credit score is, what are the best ways to using credit, and how to grow and maintain a healthy score. In this guide, we will answer all of the above questions and set you on the path to financial success.

What is a credit score?

In simple terms, a credit score is a number given to those who use credit. There are several different score ranges (consumer credit score is usually between 300 and 900) and are determined based on information on your credit report. Lenders use the number and information to determine your ability to repay a business loan or make on-time payments on credit cards. They usually look at the following when measuring your creditworthiness:

  • What you currently owe to other lenders and suppliers
  • How much credit you have used up (credit utilization)
  • If you have made your payments on time
  • How old your company is and what industry it’s in

You might now be wondering: what do the score numbers mean? To answer this question, you should first know about the two major Canadian credit bureaus. Equifax and TransUnion are credit reporting agencies that collect information on all consumers. Then they share this information with financial institutions (lenders, in our case).

What is a business credit report?

A credit report is a complete overview of your financial history, which includes your credit score, and is one of the major statements that lenders can use to determine whether or not you can receive a business loan. Besides your credit score, other key information within the report is your address, SIN, your payment history for other creditors, any record of bankruptcies, and other types of judgments that might affect your creditworthiness.

Business credit reports are more complex than personal credit reports. Here are the subsections:

Business information – Your business name, address, and phone number. It also displays additional business information such as the number of employees and sales volumes in another section.

Score summary – A brief summary of your business’ score. Below it, there is a section that displays the number of accounts, credit limits, collections, legal items, and others.

Score details – Detailed description of factors taken into account to calculate your credit score

Industry summary – This section provides a better understanding of your business activities within your specific industry

Business details – Detailed information about your business’ specific activity such as accounts in collections, legal information, any inquiries, banking and returned cheques among others.

How is a business credit score calculated?

Your credit score is calculated by taking many factors from your business credit report into consideration. These include your payment history, delinquencies, length/history of accounts, balance-to-limit ratio, and the different types of business credits that you currently have and use regularly.

What business credit score range is used in Canada?

Canada’s business credit score typically ranges between 0 to 100, but this varies between credit bureaus. Lenders usually don’t approve loan applications with a low credit score. But if you do end up getting approved with a low score, you will most likely receive a high-interest rate.

On the other hand, if your credit score is high, you are most likely to be approved for a loan faster and easier and will receive a lower interest rate.

Here is the score breakdown:

Business Delinquency Score – It allows you to determine the potential for delinquency within 12 months. The return of risk classification is 1 – 5.

Payment Index – It measures your business’ payment habits and is calculated on the total amount owing within 90 days of the day the report was requested. The range is from 0 to 99. The closer your business score to 0, the better. It indicates that all reporting creditors are paid within the specified time.

Business Failure Risk Score – It’s the less detailed one out of all, but still allows you to determine the potential risk for your business in the next 12 months.

How often does credit score get updated?

Any time your credit report is updated, your credit score gets recalculated as well. Credit reports change a few times a month or based on how often your lenders update their accounts. If you see your business credit score going up or down a lot, it’s because of a few reasons: new account added, payments in process, past delinquency getting removed from the report. When you go through your credit history and clean up any unknown accounts and information, your credit score will begin to improve.

How to see information on the credit report?

If you want to see what information is on your credit report, you can request it from one of the two Canadian credit bureaus — Equifax or TransUnion. You can either receive it online or in the mail.

The free credit report version that you get from these bureaus doesn’t include your credit score. It’s only a list of information. If you want your score, you would have to pay a fee. For more information, check out the Equifax Commercial Services page.

How long does the info stay?

This is based on where in Canada you live in. But generally speaking, this information can stay on your profile for 6 – 7 years.

Here is a quick breakdown:

Bankruptcy – stays on your profile for a maximum of 7 years

Negative credit transactions – can stay for up to 6 years

Debt collection – can stay for up to 6 years

Legal judgments – can stay for up to 6 years

What factors influence the credit score?

Payment history (35%)

This is the most important factor that affects your credit score. Lenders want to see how likely you are to repay your loan by looking at your other loans to see if you repaid them on time (or at all!) The payment history includes all of your loans and consumer debts. It shows if you have paid off your debt entirely, deferred any, or whether payments have been late or are in collections. Any type of bankruptcy against you is also in this category. Keep in mind that more recent payment history has a bigger impact on your credit score and more distant ones has a lesser impact. So, you should continuously make payments early or on time to keep your credit score high.

Credit Utilization (30%)

Credit card utilization is the ratio of credit used to credit extended – it is simply calculated by dividing your credit card balance by your credit card limit, and multiplying it by 100. You might be curious as to what is a good score? the answers vary. Some say under 35% is ideal, but most advise 30%.

Length of credit history (15%)

Most lenders like to see that you have had a credit history and used credit consistently. If you have a short credit history or have not regularly used the available credit, you are seen as a risk of defaulting on their balance. That’s why it’s a good idea to continuously use your credit and build a strong credit history. This will increase your chances for loan approval.

Soft and hard credit checks (10%)

A soft credit check provides organizations with basic information including your credit score. This is for non-lending purposes and does not negatively affect your credit score. A hard check provides organizations a detailed credit history of you and your business. In other words, all the information on your credit report. It also does negatively affect your credit score. The most common hard credit check applications are for auto loans, credit cards, bank loans, and mortgages.

Credit diversity (10%)

Lenders usually look at the types and amount of credit products you have in your credit history. If you have a variety of credit types with payments made on time, lenders will know that you’re responsible with all types of credit. This means they are more likely to approve you for a business loan.

How to increase credit score?

As mentioned earlier in this guide, negative information stays on your credit report for 6 to 7 years. When you review your report and come across any negative factors in your history, you need to counter them with positives to repair your score.

Here are some key steps:

Pay your bills on time – pay your bills each month by the due date (earlier is great, too!) Late payments can bring down your credit score. The best way to make sure your bills are paid on time is to set up automatic payments. With online banking, pay a few days in advance.

Dispute errors on your credit report – You should regularly be monitoring your credit report and score. Get your free credit report and check to see if there are any open credit lines that shouldn’t be there (this indicates fraud). Also, check for any negative information that is older than seven years and has never been removed. Then work to pay off that amount so that the collections agency can remove it from the report. For misinformation, follow these steps to file a dispute to one of the Canadian credit bureaus.

No credit inquiries unless necessary – It’s a good idea to first and foremost understand the difference between soft and hard credit checks. A soft credit check is when a landlord or employers look at your score. This does not affect your credit score. A hard credit check is when you want to increase your credit limit or apply for a loan, financial institutions will then look at the score. This will affect your credit score. So try and avoid any hard checks unless it is absolutely necessary.

Reduce credit utilization – Pay off all of your credit card balances and other debts. Use only a portion of your available credit. When you reduce your credit utilization to below 30%, you should try and maintain it. That’s if there aren’t any other strikes, such as late payments.

Final thoughts

We understand that your business means a lot to you. Business credit scores and reports can be beneficial to your business growth and are useful tools when applying for a business loan. Potential creditors, partners, and even investors will look into your business credit report and score and evaluate your business’ financial health and creditworthiness.

Create a Loop account and get a Loop Card to start building business credit while not impacting your personal credit score.

The Ultimate Guide to Canadian Business Credit Scores (2024)


What is a good credit score for a business in Canada? ›

In Canada, according to Equifax, a good credit score is usually between 660 to 724. If your credit score is between 725 to 759 it's likely to be considered very good. A credit score of 760 and above is generally considered to be an excellent credit score. The credit score range is anywhere between 300 to 900.

How to get 900 credit score in Canada? ›

How to Get a Perfect Credit Score
  1. Never Miss a Payment. Since payment history accounts for 35% of your credit score, it's important to pay all your bills on time. ...
  2. Keep Your Credit Utilization Rate Low. ...
  3. Don't Apply for Credit Too Often. ...
  4. Review Your Credit Reports. ...
  5. Become an Authorized User.
Feb 10, 2023

How to establish business credit in Canada? ›

5 ways to build your business credit
  1. Open a business bank account. ...
  2. Use your business bank account responsibly. ...
  3. Get a low-limit business credit card. ...
  4. Establish responsible credit card behaviour. ...
  5. Expand your credit portfolio as you grow your business.

What's a perfect credit score in Canada? ›

In Canada, credit scores range from 300 to 900, 900 being a perfect score and 300 the lowest. According to data from a 2022 survey, the average credit score in Canada is 672, and 694 in British Columbia. Your credit score is used by lenders to determine what kind of borrower you are.

Is a 900 credit score possible? ›

Highlights: While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.

Is it hard to get a business credit card Canada? ›

Credit History: Your personal credit history is a significant factor when you apply for a business credit card. If you have a strong personal credit score, you'll have a higher chance of being approved and receiving a higher credit limit.

How do I establish Canadian credit? ›

How to build a credit history in Canada as a newcomer
  1. Use KOHO's Credit Building tool. ...
  2. Get a monthly cell phone plan. ...
  3. Ask your landlord to report your rent. ...
  4. Apply for a newcomer-specific credit card. ...
  5. Open a secured credit card. ...
  6. Take out a car loan. ...
  7. Pay off your bills in full every month. ...
  8. Check your credit report regularly.

What is the minimum credit score to start a business? ›

Most small business lenders like to see a business credit score above 75, but local lenders may consider lower scores for small businesses or startups. Conventional consumer financing companies rarely make loans to individuals with credit scores below 500.

Can you build business credit without income? ›

You can still get a business credit card before you've started a business or generated any income. In that case, you'll just need to choose a card that asks for your Social Security number and doesn't have any business income requirements.

What can a 800 credit score get you in Canada? ›

A credit score of 800 is considered exceptional and reflects a strong credit history. With such a high credit score, you are very likely to qualify for a line of credit from most lenders. Of course, the specific terms and approval process can vary depending on the lender and your individual financial situation.

Is a 620 credit score bad in Canada? ›

Traditionally, a poor credit score is between 300 and 560, with fair credit sitting in the 560 to 660 range. A good credit score in Canada is between 660 and 725, and very good is between 725 and 760.

What is considered a bad credit score in Canada? ›

A score below 560 is generally considered to be a bad credit score in Canada, according to credit bureau Equifax. A score between 560 and 659 is often considered fair, while scores between 660 and 724 are considered to be an acceptable or good credit score.

What is a good credit score for a small business? ›

The higher your score, the better your business credit rating. To improve your company credit score, your aim is to get as close to 100 as possible. Here's an overview of what high, medium, and low risk might look like to a lender2. 80 or over: A business credit score above 80 is typically considered excellent.

What is an acceptable business credit score? ›

The average Experian business credit score is 62, which is in the low- to medium-risk range. A business with an Experian credit score above 76 is considered “low risk.”

What is considered a good credit score for a company? ›

A score of 90 or higher is generally considered to be good, indicating that a company pays its bills early or on time. A score of between 89 and 80 shows that at least one bill within the last 12 months has been made between 1 and 30 days beyond terms.

Is 630 a good credit score in Canada? ›

According to Equifax Canada, one of the country's two major credit bureaus (organizations that issue credit scores), a630 credit score falls within the range generally seen as average or slightly below average depending on where you live.

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