We asked Becca Mintz, Managing Vice President & Head of Credit and Data at Capital One Canada, about how credit scores are actually calculated, misconceptions about how to build good credit, and the most important things Canadians can do to improve their credit score.
Give us the basic rundown of how a credit score is calculated. Where does the data come from, who analyzes it, and how does “missed one cell phone bill payment” translate into a hit on someone’s score?
Think of your credit score as your financial track record. The inputs are compiled from everything you do with credit - your payment history, current debt level, history of applying for credit, and more. In Canada, we have two main credit bureaus, Equifax and TransUnion, who take all of this data and share it back with lenders, telecom companies, and other interested parties. They also produce their own “credit score” to help those parties assess the overall credit risk of a given consumer.
Payment history is one of the most important parts of credit health, so it’s true that a missed cell phone payment can show up on your file and impact your credit score. With that said, most lenders are looking for patterns of behaviour rather than one offs.
What’s the biggest misconception about how a credit score is calculated?
One of the biggest misconceptions we see is that your income directly impacts your score. We conducted a national survey and found that 30% of Canadians mistakenly believe a higher income automatically means a better credit score, when in reality, your score reflects how you manage credit rather than how much you earn.
Given this and other misconceptions that we hear, we weren’t surprised to learn that nearly half of Canadians are unsure how their credit score is calculated at all, which is why having open, judgment-free conversations about money matters so much. Another way to learn more is to double click on your own credit score and profile. We offer Capital One’s Credit Keeper for this exact reason. It’s a free, secure tool available to all Canadians, not just our customers, that lets you track your score as often as you want without impacting it. You can also check out what trades you have reported on your file and what may be contributing to it moving over time.
What actually moves a credit score the most, versus the things people obsess over that barely matter?
The real factors that drive results are the fundamentals like paying your bills on time, using credit within your means, not applying for more credit than you need, and keeping an eye out for unusual activity. People often obsess over the wrong things, for example, over 30% of Canadians incorrectly believe that carrying a credit card balance from month to month is necessary to build credit. To clear that up, you do not need to carry debt or pay interest to build a strong score.
If you already have a good credit score that is north of 800, obsessing over a few points moving up or down will not meaningfully change your financial opportunities.
Do you see AI changing how people’s credit-worthiness is assessed and credit scores calculated?
Definitely - I’m hard pressed to think of an industry that AI won’t touch in some way. With that said, I think the fundamentals will stay the same. Lenders are still looking for a demonstrated track record of responsible credit usage. I am expecting a shift in how models are built, their strength of predictive power, and more with AI advances.
What is the smart way for young people without a credit history to go about building good credit? What is the right age to start?
There are two pieces to this from my perspective - the healthy credit habits and the actual building of a score. In reference to the first piece, I actually think you can start as soon as kids start to understand the premise of money! For example managing an allowance or saving up to buy something. That’s part of the foundation for understanding credit. I think about that a lot with my eldest, who is now six. If parents are comfortable, they can also apply for an authorized user card to introduce the premise of a credit card (though parents should understand that in Canada, the usage is reported to the primary cardholder’s credit file, not the authorized user’s). Of course, I’m envisioning a teenager in that scenario, no plans to get my 6 year old a credit card!
Upon reaching the age of majority in your providence of residence, you can then start to establish a credit track record independently. One way to do that is to get an “entry level” credit card, like a Secured Card where you put down collateral against the credit extended. Of note, pre-paid cards are different and do not report to credit bureaus and thus don’t help to establish a credit score. Using a Secured Card responsibly, including making payments on time and borrowing within your means, is a great way to start building a credit track record.
More people are pursuing side hustles, gig economy jobs, or secondary sources of income. How does that impact credit-worthiness, if at all? Do people earning money that way need to do anything differently than people in traditional salaried roles when it comes to their credit?
A side hustle or gig income does not directly change your credit score. Your score is generally based on how you manage credit, not whether your income comes from a full-time salary, freelance work or a second job. For anyone earning this way (our research tells us that 86% of Canadians aged 18-44 either have or want a side hustle), credit fundamentals remain the same, but planning matters more: account for irregular income, anticipate business costs, and ensure that you’re using credit responsibly if you’re using it to cover for gaps in cash flow.
How do different generations approach personal finances?
We’re seeing a meaningful generational shift in how Canadians talk about and act on their finances. Our data shows that almost 70% of Canadians aged 18 to 34 became significantly more transparent about their money over the past year, and for 77% of them, these discussions directly prompted proactive financial moves like launching a side hustle or negotiating higher pay.
At the same time, transparency still carries emotional weight. The majority of those young adults admit to having anxieties about being transparent, which is often driven by the fear that they’re falling behind their peers. The good news is that breaking these taboos around money is actually leading to positive outcomes. Among Canadians who participate in or follow financial conversations, just under 30% say it helped them increase personal savings, 20% say it helped them pay down a significant portion of debt, and 31% say it improved their mental well-being. Ultimately, building a secure financial future requires moving from anxiety to action, and this can start with a single conversation.
If a reader wanted to meaningfully improve their credit score over the next 12 months, what’s the single highest-leverage move? And the flip side: what’s the most avoidable credit mistake you see Canadians make?
If you commit to just one financial habit over the next 12 months, make it this: paying your bills on time, every single time, because consistent payment history is the single highest-leverage move to elevate your score. If you can’t pay in full, make at least the minimum payment to stay current on your accounts.
On the flip side, the most avoidable mistake is waiting until you need credit to start paying attention to it. A credit score can affect major life milestones, like applying for a loan, a credit card, or even renting or buying a home. And yet, our research shows that one in five Canadians aged 55 and older say they have never checked their credit report. Ultimately, improving your credit is not about achieving instant perfection, but about empowering yourself with the information to make consistent choices that protect and support your financial well-being over time.
