Credit scores
Why Did My Credit Score Drop? 7 Common Reasons in Canada
The seven usual reasons a Canadian credit score falls, from a higher card balance to a missed payment or an error on your report, and what to do about each.
Why did my credit score go down?
Usually one of seven things: you used more of your credit limits, missed or paid late, applied for new credit, closed a card, a limit was lowered, an account went to collections, or there’s an error or fraud on your report.
| Reason | Why it lowers your score | What to do |
|---|---|---|
| Higher card balances | You’re using more of your available credit; aim for under 30% | Pay down balances, or pay before the statement date |
| Late or missed payment | Payment history is the most important part of your score | Pay now, set up autopay; late payments can stay up to 6 years |
| New credit applications | Each application is a hard inquiry | Space applications out; rate-shop loans within 2 weeks |
| Closed a credit card | Less available credit and, over time, a shorter history | Keep no-fee cards open with a small purchase |
| Lower credit limit | The same balance is now a larger share of your limit | Ask about the change or pay the balance down |
| Account sent to collections | Collections are negative information on your report | Contact the agency and get any settlement in writing |
| Error or fraud | Information that isn’t yours can lower your score | Dispute it with the bureau and contact the lender |
Can paying with my credit card lower my score even if I pay in full?
Yes, temporarily. Lenders usually report your statement balance, so a big month can raise your utilization even if you pay in full by the due date. The score recovers once a lower balance is reported.
Paying part of the balance before the statement date keeps the reported balance low.
How do I find out why my score dropped?
Get your free credit reports from Equifax and TransUnion and compare them with what you expect: balances, payment history, new inquiries and accounts. Many banks and apps also show the factors behind your score.
Why is my score different at Equifax and TransUnion?
The two bureaus may hold slightly different information and use different scoring models, so the same person can have scores 20 to 50 points apart. Watch the trend on one source rather than comparing them.
How long does it take for my credit score to recover?
A higher-balance drop reverses within a month or two after a lower balance is reported. Inquiries fade over months. Late payments and collections take longest, though their effect lessens as you build a fresh on-time record.
Keep reading
Credit scoresDoes Closing a Credit Card Hurt Your Credit Score in Canada?Closing a card can lower your score, mostly because you lose its credit limit and your utilization rises. When it is worth closing anyway, and how to do it without losing rewards.- Credit scoresHard vs Soft Credit Checks in CanadaWhat counts as a hard or soft credit inquiry in Canada, which one can lower your score, how long inquiries stay on your Equifax and TransUnion reports, and how to shop for a loan without extra damage.
- Credit scoresHow to Dispute an Error on Your Credit Report in CanadaHow to find and fix a mistake on your Equifax or TransUnion credit report in Canada: getting your free reports, filing a dispute online, by phone or by mail, how long it takes, and what to do if it isn’t fixed.
- Credit scoresWhat Is a Good Credit Score in Canada?Canadian credit score ranges explained (300 to 900), what lenders consider good, and how long information stays on your Equifax and TransUnion reports.
Official sources and further reading
Terms vary by product. Confirm the provider’s current terms before acting. This guide does not predict approval, realized value or credit-score changes. How WalletReturn calculates value