Your credit score might just be three digits, but those numbers can make a big difference in your life. A strong score can open doors to lower mortgage rates, cheaper insurance, and better loan offers — savings that can add up to thousands of dollars over time. In other words, the better your credit, the more money stays in your wallet.
I should know: I’m a millennial who bought a Toronto house at age 27 and fully paid off the mortgage in just three years. While saving and smart money management were integral to this accomplishment, part of that success came down to a strong credit score.
To illustrate, here’s how I managed to become a mortgage-free homeowner by age 30.
Why a good credit score means money in your wallet
You might think a credit score is just a number that lenders check. But when you maintain a good credit score, you’re actually putting real dollars back into your pocket. Here’s how and why it matters — and what you can do to make your credit score work in your favour.
What is your credit score — and how is it calculated?
Your credit score is a three-digit number (often between about 300 to 900) that reflects how likely you are to repay borrowed money. In Canada, scores are based on key factors:
- Payment history (do you pay on time?)
- Amounts owed / credit utilization (how much of your available credit you’re using)
- Length of credit history (how long your accounts have been open)
- Credit mix (types of credit: credit cards, loans, etc.)
- New credit (recent inquiries or new accounts)
Each factor plays a role; improving one can help your overall score.
How a good credit score saves you money
When you have a good to excellent credit score this translates into real, everyday savings. Here’s how:
1. Lower interest rates: When you have a higher credit score, lenders see less risk in lending to you. That means you may qualify for lower interest rates on credit cards, personal loans, or mortgages. Over time, lower rates can save you hundreds or thousands in interest.
2. Better loan and credit card offers: With a stronger score, you’ll more likely be approved for credit cards with better rewards, lower fees, or promotional offers. Car loans, lines of credit, and mortgages tend to have more favorable terms for those with good or excellent scores.
3. Less cost from missed payments: Late payments, especially those 30 or 90 days past due, hurt your score severely. Avoiding missed payments saves you in late fees, penalty interest, and the long-term damage to your credit that drives up costs in the future.
4. Lower insurance premiums & more: Some insurers check credit or credit-report-type scores when setting rates (depending on province or insurer). A better score can mean lower premiums. Also, landlords or utility companies may run credit checks. Strong credit may allow you to avoid deposits or higher charges.
How my credit score affected my mortgage
When I applied for my mortgage, my down payment of $170,000 was a financial strength, while my relatively low income was a weakness. The tipping point in helping me qualify for the loan — and getting a great interest rate — was that I’d been building up good credit for years prior to applying for a mortgage loan
During university, I didn’t follow the tradition of carrying a balance on my credit card. Instead, I treated all credit card purchases like cash: If I didn’t have the funds to pay for it, I wouldn’t charge it to the card.
I was also diligent about paying off my credit card balance each month. I used these same principles on my student loans and any other debt I took on. As a result, by the time I was ready to apply for a mortgage, I had a strong credit history and an excellent credit score. (Note: my parents didn’t even have to co-sign my home loan!)
Here’s where it counts: That excellent credit score paid off – literally. It widened the scope of lenders willing to work with me and allowed me to shop around for the lowest interest rate — keeping my monthly mortgage payments as low as possible and freeing up money I could use to repay the overall debt.
Just how much did I save with a good credit score?
A 1% difference in interest may not sound like a lotbut don’t be fooled.
Assuming it took 25 years to pay off my mortgage — the standard amortization for most new mortgages in Canada — then that extra 1% on my mortgage rate would’ve cost me an extra $40,000 in interest! That’s enough to buy two compact cars. Or 26,000 double-doubles from Timmy’s.
How can you build up your credit score?
Some millennials have been spooked by the financial crisis and are choosing to steer clear of credit cards entirely. I understand that reluctance, but this is actually a colossal mistake, and can seriously impact your future financial prospects. Lenders want to see that borrowers can handle credit cards before taking on bigger debts, like a mortgage or auto loan. And building a good credit score takes time. For that reason, it’s a good idea to start working on it long before you’re ready to buy a home.
To help here are six strategies to building a good credit score:
Start with a student or secured credit card
If you’re under 18, you can ask a parent to add you as an authorized user on their card — to learn how to use credit responsibly. Once you turn 18, apply for a student credit card (usually no annual fee, lower limits) or a secured credit card (requires a deposit, which becomes your limit). Use this card responsible to start building your credit score.
Use your credit card like a debit card
Only spend what you can pay off in full each month. Making small, regular purchases (like groceries or transit) and paying them off builds a strong payment history — the single most important factor in your score.
Always pay your credit card balance, on time
Set up automatic payments for at least the minimum, so you never miss a due date. Remember, even one missed payment can drag your score down for years.
Keep balances low
Try to use less than 30% of your available credit. For example, if your limit is $1,000, keep your credit card balance — the total amount you owe — under $300. Low “credit utilization” signals you can handle credit responsibly.
Check your credit report
You’re entitled to a free credit report from Equifax Canada and TransUnion Canada. Request this report and review it. Look for errors, old accounts, or fraud that could hurt your score — and fix them early.
Keep old accounts open
The longer your credit history, the better. If you get a starter card, consider keeping it even after you upgrade.
Limit how often you apply for new credit
Each application creates a “hard inquiry” that can lower your score slightly. Apply for new cards or loans only when necessary, and try to do it in the same time frame (as this minimizes the impact of the hard inquiries).
Mix up how you borrow
Eventually, having a mix of credit — like a card and a small line of credit or student loan — can help your score. But don’t take on debt just for the sake of variety.
Learn where your money goes — and how to make it work for you
Improving your credit score starts with understanding your money habits. Monarch Money gives you clear insights into how you spend, save, and plan — helping you spot patterns, reduce waste, and reach your goals faster. With all your accounts in one place, it’s easier to see where small changes can make a big difference.
Start tracking smarter with Monarch Money — and take the first step toward lasting financial confidence. For a limited time get 50% off your first year with code MONARCHVIP.
Why a strong credit score matters even if you aren’t buying a home
These days credit scores are checked for more than just big loans. In cities with tight rental markets, like Toronto and Vancouver, many landlords will now check your credit score as part of the rental suite application process. Some insurance companies now ask for permission to view your credit score. While you’re under no obligation to share this information, a refusal may mean you have to pay higher premiums or be denied coverage. you could face higher premiums or be denied coverage. Even employers are checking credit history to evaluate how responsible you are as a job candidate.
Basically, your credit score follows you throughout your life, and ignoring it won’t make it go away. Remember, building a strong credit score is like building muscle: it takes time, consistency, and smart habits. Start early, keep balances low, and always pay on time — your future self (and your wallet) will thank you.
—with files from Romana King
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.