What Does a 780 Credit Score Mean In Canada?

780 Credit Scor

In Canada, a 780 credit score is considered very good, and just 20 points shy of that coveted 800 score. Your credit score is significant in accessing loans and other financial benefits, and it plays an important role in securing a loan for things like a car or house.

 Even getting a cell phone plan or renting an apartment requires good credit. That’s why ensuring your credit score gets as high as possible is crucial to your financial wellbeing.

The definition of good credit can differ from lender to lender, and even between the credit bureaus. So what are the benefits of a 780 credit score? Here’s what a 780 credit score means in Canada, how it impacts you, and tips to boost it higher for better financial perks.

What does a 780 credit score mean? 

If your credit score is 780, you should pat yourself on the back. According to Equifax,  a credit score of 780 falls within the range of a very good score. Such a high score means you have consistently made good financial decisions, including making all your debt payments on time and not racking up a lot of credit card debt, among other things. 

A 780 credit score unlocks more financial benefits like easier approval for loans and lower interest rates. Although a credit score of 780 is not excellent, it will attract better deals for you.

Having a score of 780 will give you almost the same benefits as an excellent score, but scoring more points is still something you strive for. The closer you are to the perfect score, the easier it becomes to get bigger loans, favourable terms, lower rates, and better perks. 

What is a credit score?

A credit score is a three-digit number on a scale of 300 – 900 that tells potential lenders how likely you are to pay them back as agreed. Your credit score is determined by your borrowing history like how old your credit accounts are, payment behaviour, how much debt you have, and other information.

A credit score is a function of the information on your credit report. That information is collected, stored, and used by credit bureaus to calculate your score. Lenders such as banks use your credit score to decide whether or not to lend to you, and how much to lend, and at what interest rate. 

Banks aren’t the only ones that check your credit. Other interested parties like insurance companies, cell phone and internet companies, some government departments, and even landlords might consider a person’s credit score before dealing with them.

In Canada, credit scores range from the poorest score of 300 to the highest score of 900. The higher the score the better because it tells lenders you are able to manage credit and pay them back as agreed. 

A low score does the opposite; the lower the score, the more likely you are to default and cause the lender a loss, making them less likely to do business with you. Therefore, it is important to maintain your 780 credit score. 

How is a credit score calculated? 

There are several factors used when calculating your credit score. While Equifax and TransUnion use a slightly different scoring methods, both of them use the following variables: 

#1. Payment history: 35%

Your payment history accounts for 35% of your total credit score. On-time payments are good and build a positive score over time,  while late or missed payments will hurt your credit score. 

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#2. Revolving debt: 30%

This is not a measure of all the debt you have. This is the amount you owe specifically on your credit cards and lines of credit (LOC), and accounts for 30% of your credit score. 

This type of debt is referred to as your credit utilization ratio; it measures how much credit you have access to based on the total credit limits on your cards and LOCs, and how much you have already used based on your balances owing. 

#3. Length of credit history: 15%

The age of your credit file itself and the average of your credit accounts makes up 15% of your total score. A new credit file naturally has a lower credit score because there is not enough data to tell creditors how well you manage credit over the long term.

Your score will improve as your credit file and credit accounts age, as long as you make your payments on time and practice other good financial habits, like not carrying high balances on your credit cards. The older the credit file, the more information lenders have about your habits. 

#4. New loan applications: 10%

Every time you apply for a new loan or credit product, the lender will do a hard credit check by requesting your credit file from a credit bureau. A hard credit check is also called an “Inquiry” and is recorded on your file. A few inquiries spread out have a minimal impact on your credit score, but several inquiries in a short time will hurt your credit score.

#5. Public records & credit Mix: 10%

Public records and the different types of credit accounts you have account for up to 10% of your score. Public records are bad things that hurt your score, like bankruptcy or accounts that have been sent to collection agencies. Your credit mix shows how diversified your accounts are across things like personal loans, credit cards, a mortgage, lines of credit, a student loan, etc. 

What are the credit score ranges?

There are different credit scores, and they are classified into five groups known as ranges, from the worst scores to the best. We’ve already pointed out that 780 falls under the “very good”  score, but where do the others fit into credit score ranges and what does it mean for borrowers?

The table below explains the different credit score ranges:

  • Excellent: 800-900
  • Very Good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 300-579

Benefits of having an excellent credit score 

If you have an excellent score, you stand a big chance of receiving some of the best marketing offers. Lenders consider different factors when consumers apply for a loan or other credit products. An excellent score gives you more possibility of being approved for loans at a low-interest rate.

Excellent credit helps you qualify for better financial products like premium credit cards, mortgages with the lowest rates, and auto loans with the best terms, to name a few. Having an excellent credit score is not a guarantee for loan approval, but it puts you in a favourable position in the eyes of lenders.

They see it as a good indication that you pose less risk to them. Therefore, they are confident you will pay as agreed and are far less likely to put you through the stress of requiring a co-signor or security deposit. 

The Bottom Line

Your 780 credit score can qualify you for some of the best credit cards in Canada, mortgages, and loans. You may be satisfied with your high score of 780 and see no financial reason to go even higher. But it may also give you a feeling of accomplishment to see your hard work pay off, knowing the process it took to get a credit score in the region of 800 and above is quite an accomplishment. 

If you aim to reach a perfect credit score of 900, it would be a good suggestion to consider setting up an autopay that allows you to offset your credit card balance before its due date. Also, consider keeping your old credit cards open, even if you don’t use them frequently.

Arthur Dubois is a personal finance writer at Hardbacon. Since relocating to Canada, he has successfully built his credit score from scratch and begun investing in the stock market. In addition to his work at Hardbacon, Arthur has contributed to Metro newspaper and several other publications