A credit score of 600 is considered a “fair” credit score in Canada. While it may not be classified as excellent or even good, it’s not necessarily bad either. This score places you in a gray area where you may qualify for some credit cards and loans, but traditional banks may still view you as high-risk.
In Canada, credit scores are calculated by two major credit bureaus, TransUnion and Equifax, and they typically range from 300 to 900. The higher your credit score, the better your chances of securing credit cards and loans with favorable terms and interest rates. Here’s a breakdown of the credit score classifications in Canada:
A credit score of 600 falls within the “fair” credit score range in Canada, which means it’s neither good nor bad. It’s worth noting that the average credit score in Canada, according to Borrowell, is around 660. So, while a 600 credit score is not too far off from becoming “good,” increasing it by 50-60 points could significantly improve your credit prospects.
While some traditional banks may hesitate to approve credit card applications with scores below 660, there are alternative options to consider:
Secured credit cards are designed for individuals with subpar credit, including scores as low as 500 or 600. These cards often offer guaranteed approval, but you’ll typically need to provide a security deposit equal to your credit limit. For example, the Neo Secured Mastercard has no annual or monthly fees, offers up to 5% cash back on purchases, and requires a low minimum security deposit of $50.
Retail store credit cards tend to be more lenient with credit score requirements compared to traditional credit cards. However, their rewards are often tied to shopping at specific stores, and redemption options may be limited.
If you’re a student, you may qualify for student credit cards with less stringent eligibility requirements. For instance, the Tangerine Money-Back Credit Card only requires a 600+ credit score and an annual income of at least $12,000. It offers cash back rewards with no annual fees.
Consider applying for a reloadable prepaid card like the KOHO Prepaid Mastercard. It offers cash back on select purchases, unlimited debit transactions, and even allows you to earn savings interest on your balance. Using such cards responsibly can also help build your credit score over time.
Securing loans with a 600 credit score can be challenging, as many traditional banks may be hesitant. However, if you have a stable job and proof of income (typically ranging from $20,000 to $30,000 per year), you may still be eligible for bad credit loans through alternative lenders. Loan comparison sites like Loans Canada and LoanConnect can help you find alternative lenders that accept various credit ratings. Keep in mind that with a 600 credit score, you might face higher interest rates.
Qualifying for a car loan with a 600 credit score is possible and may even be easier than securing a personal loan. Car loans often use the vehicle as collateral, which can make lenders more willing to approve applications. Additionally, some lenders may request a co-signer to strengthen your application. Companies like Cars Fast work with multiple dealerships across Canada to provide car loans, with terms that can go up to $75,000 over 1-8 years. Requirements typically include a minimum annual income of $20,000 and residency in Alberta, BC, or Ontario.
Understanding how credit scores are calculated is crucial for improving your creditworthiness. Five main factors impact your credit scores:
Timely payments are crucial. Missing payment deadlines can negatively affect your credit score.
Aim to keep your credit utilization rate below 30%. For instance, if you have a $10,000 credit limit, try to maintain a balance of $3,000 or less.
Keeping old credit accounts in good standing can positively impact your score. A longer credit history is better.
Each time a lender checks your credit for a new application, it can lower your score. Multiple hard inquiries within a short period may signal financial trouble to lenders.
Having various types of credit accounts (credit cards, loans, mortgages, etc.) can improve your credit score by demonstrating your ability to handle different types of credit.
To boost your credit score and work toward reaching 700 and above, consider taking these actions:
While it’s possible to qualify for a mortgage with a 600+ credit score, you may face higher interest rates and less favorable terms.
Renting an apartment with a credit score of 600 can be challenging. You may need a co-signer with good credit or be required to pay rent in advance.
Raising your credit score from 600 to 700 can take 12 months or longer, depending on your financial habits and credit management.
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