My first credit card was a no-fee TD card with a $500 limit. I maxed it out more often than I would like to admit.
I never missed a payment, which was the one thing I got right. For a while, though, I was paying the minimum each month and letting the rest ride, and the interest rode along with it. I knew credit scores existed. I did not know mine until I was about 23.
The file was being written the whole time. I just never read it.
Picture the day somebody else reads it. You find a place. The rent fits your budget and you have the damage deposit saved. The landlord runs a credit check. The score comes back low, because nothing has ever reached a credit bureau in your name, and a blank file gets treated almost the same as a bad one. The apartment goes to someone else.
When my wife and I rented a basement apartment in 2020, the landlord never ran a check on us. Plenty do, and the fix takes time, which is why the moment to start thinking about it is now.
The Number Is a Record of Whether You Pay People Back
A credit score is a number between 300 and 900. The higher, the better. In Canada, it is calculated by two credit bureaus: Equifax and TransUnion. Each runs its own calculation, so you technically have two scores, usually close together.
The score summarizes one thing: how reliably you pay back money you owe. Lenders and landlords use it to decide whether to trust you with a loan or a rental agreement.
Equifax Canada's own guideline for reading it runs like this, though every lender sets its own cutoffs:
- 300 to 559: Poor
- 560 to 659: Fair
- 660 to 724: Good
- 725 to 759: Very good
- 760 to 900: Excellent
"Good" starts at 660, and the best offers tend to go to the people sitting at 760 and above.
Five Things Feed the Number, and One Outweighs the Rest
Five factors go into your score. The percentages below are approximate, but they give you the right picture of what actually matters.
Payment history (about 35%). This is the biggest one. Do you pay your bills on time? Even one late payment can pull your score down hard, especially early on, when you do not have much history to cushion it. A minimum payment made by the due date still counts as paid on time, which is how my own payment history stayed clean through a stretch I am not proud of.
Credit utilization (about 30%). This is the percentage of your available credit you are actually using. If your credit card has a $1,000 limit and you are carrying a $900 balance, your utilization is 90%. That is considered high, and it hurts your score. My $500 card sat at its limit often enough, and the scoring model reads that as someone under financial stress. It was reading me correctly. Keeping your balance below 30% of your limit is the standard guideline. Paying the card off completely every month is even better.
Length of credit history (about 15%). How long have you had credit accounts open? A longer track record works in your favour. This is why starting early matters more than most teens realize.
New credit inquiries (about 10%). Every time you apply for a new credit card or loan, the lender does a "hard inquiry" on your file. One or two is fine. Applying for five cards in a month looks risky to the scoring model and pulls your score down.
Credit mix (about 10%). Having more than one type of credit, a card alongside a car loan for instance, signals that you can handle different kinds of borrowing. As a teen you will likely have one type, which is fine; this factor matters more later.
Why Your Debit Card and Your Savings Build Nothing
The bureaus only ever see borrowing. Your debit card purchases stay off the file. So does the balance in your savings account, however healthy it looks, and so does your income.
A credit score grows from one source: an actual credit product, used and paid over time.
Why Starting Before 20 Gives You a Real Advantage
The length-of-history factor is where an early start pays off, because the only input it takes is months.
Because the length of your credit history is part of your score, someone who opens their first credit card the year they turn 18 ends up with a seven-year head start over someone who opens their first card at 25. The person starting at 25 is building from scratch at exactly the moment a landlord or a car dealership starts pulling the file.
I check mine on Credit Karma, which shows your TransUnion score for free. Borrowell does the same job with the Equifax score. Checking it yourself counts as a "soft inquiry," and your score stays exactly where it was. Once a year is plenty.
One Card, Paid in Full, Builds the Whole Thing
The whole method fits in four short sentences.
Get a credit card. Use it for small, regular purchases. Pay the full balance before the due date every month. Repeat.
The card does its job by existing and getting paid on time. Carrying a balance adds nothing to your score, and spending anywhere near your limit works against you. One small purchase a month, paid in full, is enough to build history.
If you are under 18, you cannot open a card in your own name yet, and my advice is to leave it there. Some parents offer to add a teenager to their own card as an authorized user. I would rather you wait and build a file that is yours, with your name on the application and your habits on the record.
At 18, two routes open. The first is a secured credit card. You deposit money upfront (say, $300 to $500) and that amount becomes your credit limit, so the issuer carries very little risk and approval is much easier. Most secured cards come from smaller issuers, Home Trust and Capital One among them, since Canada's big banks have largely stepped away from secured cards. Some charge an annual fee, so read the terms first.
The second route is a student credit card, once you are in college or university. TD, RBC, Scotiabank and BMO each have one built for someone with a thin file, with a low limit and an annual fee of zero. The step-by-step version of both routes is in how to build credit before you turn 20.
Four Habits That Drag the Number Down
The most common mistakes:
Paying late. Even a single missed payment can drop your score noticeably. Set up automatic payments, ideally for the full balance each month.
Maxing out your card. A high balance relative to your limit signals financial stress to the scoring model, even if you always pay it off eventually. Keep your utilization low.
Applying for too many cards at once. Each application triggers a hard inquiry. Space them out. If you need a new card, apply once, then stop applying for a good while.
Closing old accounts unnecessarily. An account you close stops adding to your length of history. A no-fee card you rarely use is worth keeping open for that reason alone.
A Good Name Is the Thing Underneath the Score
Proverbs 22:1 says, "A good name is more desirable than great riches; to be esteemed is better than silver or gold."
A credit score is a small, mechanical version of a good name. It records whether you paid back what you borrowed, when you said you would. Proverbs has something wider in view, the kind of name that walks into a room ahead of you, long before any report does. The habit that builds one builds the other.
Building the habit of paying what you owe, when you owe it, is worth more than the score itself. The score is just evidence of the character underneath.
Start building that character now. The score will follow.
Start This Week
If you are 18 or older and do not have a credit card yet, look up secured credit cards and compare the deposit against the fee, or your bank's student card if you are enrolled. Apply for one. Then open Credit Karma or Borrowell and check your score. If you have never had a credit product, there may be no score there yet, which is normal at your age. The clock has simply not started, and this week is a good time to start it.
If you are under 18, there is nothing to open yet. Read the five factors again and decide now what kind of cardholder you are going to be. I decided by accident, and it cost me interest I could have kept.