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Is 400 a good or bad credit score?

Published Date
Author Beth Craft

Find out where you fall on the credit scale.

Let’s cut to the chase: 400 isn’t an ideal credit score. In fact, anything under 500 is generally considered “poor” by credit bureaus. But don’t get discouraged. A low score doesn’t mean you’ve failed. It just means you’ve got some rebuilding to do – and a lot can be done to turn things around.

What does a 400 credit score actually mean?

Credit scores in Canada range from 300 to 900, meaning a 400 can likely make life more stressful. It may be hard getting approved for things like car loans, personal loans and credit cards. And once you do get approved, you’ll probably have to pay higher interest rates. But it’s important to remember that your credit score isn’t fixed. It’s not even based on your income. It reflects how you behave with credit, which means it’s not too late to change it with healthy credit habits and behaviours.

How to improve your credit score

  1. Check your credit report. Mistakes happen. And when they happen on your credit report, they can drag down your score. Order copies of your report from Equifax® and TransUnion, Canada’s two major credit bureaus and look for errors in your payment history, old accounts that should have been closed and inaccurate balances or duplicate debts. Make sure you check both reports as each bureau is different and may have different information on file. If you spot an issue, file a dispute right away.

  2. Keep your credit use in check. Your credit utilization rate (aka how much of your available credit you’re actually using) plays a big role in how your credit score is calculated. The goal here is to use less than 30% of your credit limit. So if the limit on your card is $1,000, try to keep your balance under $300. Life happens and unexpended expenses can make this one of the harder tips to follow. But even small improvements and reductions in your credit use can help your score recover over time. 

  3. Pay your bills on time (every time). This is one of those tips that’s simple, but not always easy. Surprise curve balls and rising costs can get in the way of paying off your entire balance on time, every month. But, your payment history has one of the biggest impacts on your credit score. So make sure you’re at least making minimum payments on time and more whenever you can. Setting up auto payments and reminders can help you stay ahead of due dates and on track to start nudging your score in the right direction.

  4. Use a secured credit card to build credit. If you’ve had trouble getting approved for a traditional credit card in the past, a secured credit card can be a smart workaround. It works just like any other card, only you pay a security deposit (usually a few hundred dollars). How you manage a secured credit card gets reported to credit bureaus. So using it for everyday expenses, paying it off on time each month, and keeping your balance low should start rebuilding your credit score over time.

  1. Use a credit monitoring tool. You can’t fix what you can’t see. So it’s a good idea to check in on your credit score every week or so. A tool like Credit Keeper is great for doing this. With it you can check your TransUnion credit score** for free, whenever you want, as often as you want. This allows you to spot changes, monitor your progress and watch how your credit decisions affect your score over time. You don’t need a Capital One credit card to use it. Plus, it only performs soft inquiries, which means no matter how much you use it, it won’t ever hurt your score.

  2. Boost your financial know-how. If you’ve ever felt like financial topics were designed to confuse you, you’re not alone. But the truth is that the more you understand, the more power you have. Want to know which behaviours affect your credit score the most? The secrets to using a credit card responsibly? Which expenses to include in your budget? How to protect yourself from fraud? You’re already in the right place. Our blog’s got you covered with easy-to-read, no nonsense answers to your financial questions.

How long will it take to improve a 400 credit score?

The truth is rebuilding can take time. You won’t jump from 400 to 700 in a week. But just because things won’t change overnight, doesn’t mean you’ll be at this forever. Depending on your situation, it can take anywhere from several months to a few years. The key is to stay patient and consistent. Focus on small achievable steps and eventually, that 400 can become a 500, then a 600, and beyond.