The anxiety of checking your credit score only to find it lower than expected is a reality for thousands of Canadians heading into the summer of 2025. With interest rates finally stabilizing after years of volatility, many are looking to make major purchases—but their credit scores stand in the way.
“We’re seeing unprecedented numbers of Canadians taking active steps to rebuild their credit this year,” says Melissa Chen, financial analyst at the Canadian Credit Bureau Association. “The post-pandemic financial hangover is still affecting many households, but there’s a clear path forward for those willing to take systematic action.”
Recent data from TransUnion Canada shows that approximately 27% of Canadians currently have credit scores below 650, traditionally considered the threshold for “good” credit. This reality makes everything from mortgage applications to auto loans significantly more expensive—or entirely out of reach.
The good news? A poor credit score isn’t permanent. Here’s how to systematically rebuild your credit score in Canada for 2025:
First, obtain your credit report from both major bureaus—Equifax and TransUnion. The 2025 Financial Consumer Protection Act now mandates free weekly access to your credit reports, removing what was previously a significant barrier. Review these reports meticulously for errors, which appear in roughly 23% of Canadian credit files according to the Financial Consumer Agency of Canada.
Next, address any outstanding collections or delinquent accounts. Even small unpaid balances can severely damage your score. “A $78 unpaid medical bill can drop your score by up to 100 points,” notes Chen. “These small items are frequently overlooked but pack an outsized punch.”
Consider a secured credit card if traditional credit remains inaccessible. Major Canadian banks have expanded their secured credit offerings in 2025, with initial deposits starting as low as $200. These cards report to credit bureaus just like unsecured cards, helping establish positive payment history.
For those struggling with multiple debt payments, the new Canadian Debt Consolidation Program introduced in February 2025 offers streamlined options with built-in credit rehabilitation features. Over 12,000 Canadians have already utilized this program, with average credit score improvements of 43 points within the first six months.
“Payment history represents 35% of your credit score calculation,” explains Wei Zhang, credit rehabilitation specialist at CO24 Business. “Setting up automated payments ensures you never miss a due date, which is the single most effective way to improve your score over time.”
Additionally, maintain low credit utilization—ideally below 30% of your available credit. Someone with a $10,000 limit should aim to keep balances below $3,000. The latest credit scoring models in Canada place even greater emphasis on utilization rates than previous versions.
Patience remains essential. “Credit improvement isn’t instant,” reminds financial educator Jordan Williams. “Consistent positive behavior over 6-12 months is the minimum timeframe for meaningful improvement, with serious delinquencies taking up to seven years to fully disappear from your record.”
For young Canadians or newcomers building credit from scratch, the Credit-Building Alternative Program launched in March 2025 allows rent payments, utility bills, and even streaming subscriptions to contribute to your credit history when registered through participating financial institutions.
The road to credit recovery requires discipline and consistency, but the financial opportunities it unlocks make the journey worthwhile. With mortgage rates predicted to remain competitive through 2026 according to the latest CO24 Breaking News financial forecast, investing in your credit score today could save tens of thousands in interest over the life of your next major loan.
What’s your first step toward rebuilding your credit score this year?
