Main Differences between Credit Score in Canada vs the U.S.

Blog TLDR

In general, the way credit scores are calculated in Canada is similar to the way credit scores are calculated in the U.S. There are however, a few differences. Here’s an in depth comparison between both country’s credit approach. 

Like most things between us, the way Canada and the United-States calculate credit scores is very similar, expect for a few small differences. Even though they are fundamentally similar, credit bureaus in Canada and U.S. don’t share any information between them. This means that if you plan on moving to the U.S. or vise versa, you’ll have to start building your credit from scratch, which could be good news for many of us. This is why understanding the main differences between credit score in Canada vs the U.S. could come in handy!

credit score canada vs us

Credit Score in Canada vs the U.S

Who determines credit scores:

Each credit bureau will have a different score for the same person because of the different algorithms they use.

Learn More: Why are credit scores different between agencies?

Scores:

In Canada and the U.S., the most common model for determining credit scores is FICO®. This model generates a credit score through a mathematical algorithm using the information found on your credit score. The higher the score, the better your credit rating.

In 2018, the Average credit score in Canada was 650/900 while in the U.S. the average score was 704/850.

Credit Karma

These days there are many apps out there that will give you your credit score in a matter of minutes.  

What impacts the scores:

The factors used to determine your credit score in Canada and the U.S. are exactly the same.

Learn More: What Affects My Credit Score the Most?

Main differences between credit reports in Canada vs the US

The main difference between both countries is that Canada uses an additional rating system.

This additional rating system consists of a number between 1-9 and one of the following letters: I, O or R. Each month, your lender, whether it be from your credit card company or your mortgage company, sends a number/letter combination to the credit agencies, who then update it on your credit file.

Unpacking the number/letter combinations:

Number 1-9:

I, O or R

All in all, there aren’t many differences between credit scores in Canada vs U.S. and yet they don’t transfer across the border.

So, if you’re planning to move to the U.S. it’s a good idea to start planning ways to work around that. Especially since it can impact many crucial areas of your move such as renting a new apartment or car.

The easiest way to dodge this problem is to look for companies that offer credit and leasing to ex-pats. They will take the extra steps and do a back-round check from back home.

If you are a newcomer to Canada, check our Ultimate Guide to Building Credit Score in Canada and start in the right way. 

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