Nearly half of Canadians aged 18 to 34 worry their financial health or credit score could prevent them from reaching major financial milestones over the next year, as rising living costs put additional pressure on household budgets, according to a new Equifax Canada survey.
The survey found that 49 per cent of respondents in that age group were concerned their financial standing could affect their ability to qualify for a mortgage, secure a rental apartment or finance a vehicle. That compares with 31 per cent of Canadians aged 35 to 54 and 11 per cent of those aged 55 and older.
Nationally, 27 per cent of Canadians surveyed expressed concern that their financial health or credit score could affect at least one major financial milestone in the next 12 months. The proportion increased to 41 per cent among households with children under 18.
The findings also point to a growing focus on credit management, particularly among younger Canadians. Overall, 42 per cent of respondents said changing financial goals had prompted them to take a more proactive approach to managing their credit scores, rising to 59 per cent among those aged 18 to 34 and 55 per cent among households with children.
“Understanding the components that impact a consumer’s credit score can help empower Canadians to plan for life’s biggest financial decisions, from finding a place to live to accessing the most favorable credit terms,” said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada.
“Younger Canadians are recognizing the importance of trying to establish better financial habits early on as everyday expenses are putting pressure on household budgets. Understanding how to build credit and taking steps to maintain a healthy credit history can help consumers better prepare for important financial decisions.”
Household budgets remain under pressure
The Equifax survey highlights a gap between Canadians’ credit standing and their ability to manage everyday expenses. Nearly one in five respondents, or 19 per cent, said they had a strong credit score but were struggling to cover their expenses. That figure climbed to 25 per cent among households with children under 18.
Meanwhile, 39 per cent of Canadians said they could comfortably cover their expenses and still have money left over, while another 37 per cent reported being able to meet their expenses but having little or no money remaining.
The findings also suggest some Canadians are increasingly relying on borrowing to manage essential costs. Fifteen per cent of respondents said they sometimes or regularly used credit or borrowed money to cover basic expenses. That proportion rose to 21 per cent among Canadians aged 18 to 34 and households with children.
Another 15 per cent said they were taking proactive steps to protect their credit standing amid changing economic conditions.
Rising costs have also influenced how consumers approach credit management. Seventeen per cent said higher expenses had prompted them to pay more attention to their credit scores, while 10 per cent reported becoming less focused on them.
A further 17 per cent said they understood what they needed to do to improve their credit scores but their financial circumstances prevented them from taking those steps.
Regional differences emerge in financial pressures
Atlantic Canadians reported some of the highest levels of financial pressure in the survey, with nearly one in four respondents, or 24 per cent, saying they sometimes or regularly relied on credit or borrowing to cover essential expenses. The national figure was 15 per cent.
Respondents in Atlantic Canada also reported greater concern about their financial health affecting major borrowing decisions. Nineteen per cent worried about their ability to finance a vehicle, compared with 10 per cent nationally, while 17 per cent expressed concern about qualifying for or renewing a mortgage, compared with 11 per cent across the country, according to Equifax.
Ontario also recorded higher-than-national levels of concern about financial milestones. Nearly one-third of Ontario respondents, or 32 per cent, said their financial health could affect a major financial decision within the next 12 months, compared with 27 per cent nationally.
Eighteen per cent of Ontario respondents also reported relying on credit or borrowing to cover essential expenses.
Younger Canadians focus on credit readiness
The survey found that younger Canadians are particularly focused on improving their credit standing in preparation for housing-related financial commitments.
Among respondents aged 18 to 34, 21 per cent said they were working to optimize their credit scores to prepare for qualifying for or renewing a mortgage, compared with 11 per cent nationally.
Nineteen per cent of younger adults said they were building their credit standing to strengthen rental applications, nearly double the national proportion of 10 per cent.
However, financial constraints remain an obstacle for some. Twenty-one per cent of Canadians aged 18 to 34 said they knew how to improve their credit scores but lacked the financial circumstances to do so, compared with 17 per cent of respondents overall.
“Financial literacy is all about understanding the positive steps you can take to strengthen your financial position,” added Oakes.
“Regularly reviewing your credit report, making payments on time where possible and understanding how credit utilization affects your score can help consumers make more informed decisions, even when household budgets are tight. Many Canadians are gaining valuable insight into credit building, and consistent actions like monitoring credit reports, paying bills on time, and managing credit utilization can build a solid foundation for achieving lifelong financial goals.”
Equifax Canada recommends that consumers regularly review their credit reports, monitor their credit activity and understand the factors that influence their credit scores. The company says Canadians can access their Equifax credit reports and scores at no cost through its Canadian website.
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