Is 570 credit score bad?

If you’re curious about your credit score, you’ve come to the right place. Credit scores are super important for all adult Canadians: they’re the measure used by lenders (such as mortgage companies and banks) to determine a person’s credit worthiness (which is a fancy way of saying how likely someone is to pay back a loan).

The golden rule is that the higher someone’s credit score, the more likely they’ll be to qualify for a loan. And, perhaps more importantly, how affordable their loans will be, since lenders offer their best rates to those with the highest credit scores.

Is 570 credit score good or bad?

If you’ve got a 570 credit score, we’ve got some good news and some bad. Equifax, one of Canada’s major credit bureaus (along with TransUnion), has five ratings for credit scores: poor, fair, good, very good, and excellent. If you’ve got a credit score of 570, you would fall within the poor range.

That’s the bad news. The good news is that you can improve your credit score. More on that later; but first, let’s get to know how credit scores work.

How do credit scores work?

As mentioned, credit scores in Canada play an important role in determining an person’s financial reputation. A credit score is a three-digit number ranging from 300 to 900, with higher scores indicating stronger creditworthiness. Pretty straight forward, right? Your credit score is determined by your credit history and your likelihood of managing debt in the future (i.e. how likely you are to pay back loans you take out on time).

A few things determine how your credit score is calculated. Payment history is a crucial component, making up about 35% of your overall score, according to Equifax. Timely payments on credit cards, loans, and other debts positively impact the score, while late or missed payments can have negative effects. Credit utilization, which is the amount of credit being used compared to the total available credit, carries a weight of around 30% in determining the score.

Other factors include the length of credit history, types of credit used, recent credit applications, and public records such as bankruptcies or collections. It's important to note that credit scores are individual-specific and can vary between credit bureaus in Canada. What that means is, you might see two different scores when you look up your credit history, since TransUnion and Equifax use slightly different algorithms to calculate scores. Generally speaking, though, both credit bureaus will view your credit history similarly. What we mean by that is that a “poor” score with TransUnion will also be a “poor” score with Equifax. The same is true for good and even excellent scores.

The reason credit scores are so important is that lenders, such as banks or financial institutions, rely on credit scores to assess the risk associated with lending money. A higher credit score often leads to more affordable interest rates, larger credit limits, and better loan terms. That’s why it’s essential for you to establish and maintain a positive credit history by making regular payments, keeping credit utilization low, and avoiding excessive credit applications.

Monitoring and managing your credit score in Canada is crucial for your financial well-being. Regularly checking credit reports, understanding the factors affecting the score, and taking steps to improve it can help individuals qualify for better financial opportunities and achieve your long-term financial goals.

What does a 570 credit score mean?

The short answer is that if you have a 570 credit score, you have poor credit. That means credit bureaus have determined that you’re a credit risk to lenders, that you might not be able to pay back a loan.

The result is that you might have trouble finding a loan, such as a car loan or line of credit, or might encounter difficulties when trying to purchase a home. A poor credit score might also impact your ability to get a job, since some employers conduct credit checks during the overall background check of a candidate.

Don’t worry, though, because credit scores can improve. And while you might have a bit of a ways to go to get to a good or excellent credit score, today is the best day to get started on building your credit.

Before that let’s get a little more background to help us understand how Equifax breaks down its five different credit score ranges:

Poor: 300 to 579

A 570 credit score falls within this range. While it may seem scary, hang in there! If you find yourself in this range, it's not too late to rebuild your credit. It may be a bit tougher to get approved for new credit right now, but don't lose hope. Take steps to improve your credit scores, and you'll be on your way to better financial opportunities in no time. We’ll give you tips on how to do that shortly.

Fair: 580 to 669

If you’re in this range, don't worry! You're still in the game. While you may be seen as a "subprime" borrower, there are still options available. It might be a bit more challenging to qualify for new credit, but with some effort, you can work your way up to a higher score.

Good: 670 to 739

Well done! Lenders consider you as a reliable borrower with acceptable risk. You're in a good position to secure credit and make your financial goals a reality.

Very good: 740 to 799

Great job! Your credit behaviour has been consistently positive. You're on track to enjoy more financial opportunities and have a good chance of being approved for additional credit when you need it.

Excellent: 800 to 900

Congratulations! You're in the top tier of credit scores. Lenders see you as a low-risk borrower, which means you'll likely have an easier time getting approved for loans than those with lower scores.

How do I improve a 570 credit score?

The good news – if you’ve got a 570 credit score or a similarly poor score – is that there are things you can do to improve it. Here are a few tips to get you on the right track:

Pay your bills on time: consistently making timely payments might be the most important aspect when trying to improve your credit score. Late or missed payments can have a significant negative impact on your credit score. To help you manage your bills, set up reminders, automate payments, or create a budget to ensure you meet all your financial obligations promptly.

Reduce credit card balances: Aim to keep your credit utilization ratio below 30%. This ratio compares your outstanding credit card balances to your total credit limit. Lowering your balances demonstrates responsible credit management and positively affects your score.

Limit new credit applications: Applying for multiple credit accounts within a short period might lead the credit bureaus to assume you might be financially unstable. Each application creates a "hard inquiry" on your credit report, which can slightly lower your score. So, be selective and apply only when necessary.

Have a mix of credit: A healthy credit mix, such as having a credit card, a loan, and a mortgage, can benefit your credit score. It shows lenders your ability to handle various types of credit responsibly.

Monitor your credit report: Regularly check your credit report from the two major credit bureaus in Canada – Equifax and TransUnion. Look for errors, such as incorrect account information or late payments that don't belong to you. Dispute any inaccuracies to rectify your report.

Build a positive credit history: If you have limited or no credit history, consider establishing it with a secured credit card or becoming an authorized user on someone else's credit card. Use these accounts responsibly and make timely payments to build a positive credit track record.

Resolve outstanding debts: Address any outstanding debts promptly. Contact your creditors or consider debt consolidation or repayment plans to manage and eventually clear your debts. Showing progress in resolving debts can boost your creditworthiness.

Build credit using a credit building service: KOHO makes it super easy to build credit if you’ve got a bruised credit score (or no credit at all). The way it works is super simple: sign up for a KOHO Spending account. KOHO currently offers three different account subscriptions, so there’s something for everyone.

After signing up, opt into Credit Building. Depending on your plan, you can get Credit Building for as little as $7 a month.

If you’ve got a 570 credit score, know that there are ways for you to improve it. If your score is even lower, the same is true! Don’t fret too much or get too down on yourself. With a little work, you can improve your score and unlock financial opportunities. Just remember that improving your credit score takes time and patience. Focus on consistent positive financial habits, and over time, you'll see your credit score rise, opening doors to more financial opportunities.