What Credit Score Do You Need for Equipment Financing?
In Canada, a credit score of 650 or higher qualifies you for most equipment financing options with competitive rates. Scores between 600 and 649 still get approved through private lenders at higher rates. Below 600, expect limited options, larger down payments of 20-30%, and interest rates of 12-18%. Equipment financing is secured lending, so the machine's collateral value helps offset lower credit scores.
You want to finance a piece of equipment. Maybe it is a John Deere 333G track loader that would let you take on grading work you have been subbing out. Maybe it is a used Cat 320 excavator you spotted at a dealer for $165,000. Maybe it is a Bobcat S650 skid steer that would double your productivity on residential jobs. Before you fill out a single application, the question sitting in the back of your mind is whether your credit score is good enough. Maybe you had a rough couple of years — a slow-paying GC put you in a cash crunch, or a divorce knocked your finances sideways. Maybe you have no idea what your score even is because you have never checked it.
Here is the straight answer: your credit score matters, but it is not the whole story. Equipment financing is secured lending — the machine is the collateral — and that changes the equation compared to unsecured borrowing. The score you need depends entirely on which type of lender you are talking to, what equipment you are buying, how much you can put down, and how strong your business is. This guide breaks down every credit tier in detail, explains what lenders actually look at beyond the number, and gives you specific strategies for wherever you land on the scale.
The Credit Tiers: What Each Score Range Actually Means
In Canada, credit scores range from 300 to 900. Here is how equipment lenders view each tier, with the rates, down payments, and lender options you can realistically expect.
750 and Above — Excellent Credit
This is the top tier. Every lender in Canada wants your business. Banks, credit unions, captive finance programs (Cat Financial, John Deere Financial, Kubota Credit), and private lenders will all compete for your deal. You are in a position to negotiate.
At this level, expect rates in the 5-8% range through banks and credit unions, sometimes lower through promotional dealer programs. Down payment requirements are minimal — 0% to 10% depending on the lender and the equipment. Terms up to 84 months are available on newer machines. If your business financials are solid and you have been operating for more than two years, financing a Komatsu PC210 or a new Cat 308 mini excavator at this tier is about as smooth as it gets.
Your main advantage here is choice. You can afford to be selective about lender, terms, and structure. Shop around and do not settle for the first offer.
680 to 749 — Good Credit
Most banks will still work with you, though you might not get their absolute best promotional rate. Credit unions are a strong option, especially if you have an existing relationship. Private lenders will offer competitive terms because you represent manageable risk.
Expect rates in the 7-10% range. Down payments of 10% are standard, though some lenders may accept less on newer equipment from major brands. Terms of 48 to 72 months are typical. A contractor at 710 financing a used Volvo EC220 with 3,000 hours is going to have a straightforward approval process.
The key difference between this tier and the one above is negotiating power. You still have good options, but you have slightly less leverage to push for the lowest possible rate. Compare at least two or three offers before committing.
620 to 679 — Fair Credit
This is where the big banks start getting hesitant. Some will still approve you, especially if your business has strong revenue, a good track record, and the equipment is newer with strong collateral value. Credit unions might work if you have banked with them for years. But private lenders become your most reliable and practical option in this range.
Rates run 10-14% depending on the lender, the equipment, and the rest of your financial picture. Down payments of 10-15% are typical. Terms of 36 to 60 months are standard. You can still get a solid deal here — a Bobcat T770 track loader or a used John Deere 310 backhoe is absolutely financeable at a 640 credit score — but you are paying a premium for the risk the lender is taking.
Key takeaway: At the 620-679 level, your down payment and business revenue become critical factors. A strong down payment of 15-20% or bank statements showing healthy monthly deposits can offset the credit score and get you into better terms than the score alone would suggest.
550 to 619 — Below Average Credit
Banks are mostly out of the picture. You are working with private lenders, specialized equipment finance companies, and select dealer financing programs — our banks vs. private lenders guide explains the differences in detail. This is where a broker becomes especially valuable because they know exactly which lenders work in this space and what each one needs to see.
Rates typically run 13-18%. Down payments of 15-25% are expected. Terms are usually limited to 36-48 months. The monthly payment is higher and the total cost is significantly more than someone with good credit would pay for the same machine.
But deals get done at this level every single day. A contractor at 580 who can put 20% down on a used Cat 320 with good hours and who has bank statements showing $50,000 or more in monthly business deposits will find lenders willing to work with them. The machine's collateral value carries real weight here. Read our full guide on equipment financing with bad credit for detailed strategies at this tier.
Below 550 — Poor Credit
Options are limited but not nonexistent. You are working exclusively with private lenders who specialize in challenged credit, and some rent-to-own programs. The equipment needs to be solid collateral — a known brand with strong resale value, reasonable hours, and decent condition. A no-name machine or something with 15,000 hours is not going to get financed at this level.
Expect rates of 16-22% or higher. Down payments of 20-30% are standard, sometimes more. Terms are short — 24 to 48 months. The total cost of financing is steep, and you need to be honest with yourself about whether the deal still makes financial sense at these terms.
That said, there is a path forward even at this tier. A meaningful down payment, strong monthly revenue, newer equipment with excellent resale value, and a clear explanation of what happened to your credit can still produce an approval. And making consistent payments on this deal is one of the fastest ways to rebuild your credit for better terms next time.
Credit Tier Expectations at a Glance
| Credit Tier | Score Range | Rate Range | Down Payment | Term Length | Primary Lender Options |
|---|---|---|---|---|---|
| Excellent | 750+ | 5-8% | 0-10% | 48-84 months | Banks, credit unions, captive finance, private |
| Good | 680-749 | 7-10% | 10% | 48-72 months | Banks, credit unions, private lenders |
| Fair | 620-679 | 10-14% | 10-15% | 36-60 months | Some banks, credit unions, private lenders |
| Below Average | 550-619 | 13-18% | 15-25% | 36-48 months | Private lenders, specialty finance |
| Poor | Below 550 | 16-22%+ | 20-30%+ | 24-48 months | Specialist private lenders, rent-to-own |
What Lenders Actually Look at Beyond Your Score
Here is something most contractors do not realize: your credit score is just the opening line of the conversation. Equipment lenders evaluate a full picture, and sometimes the factors beyond the score matter more than the number itself.
Payment history patterns. A lender cares less about the score number and more about what is behind it. If your score is 640 because you missed a few credit card payments during a slow stretch but your equipment loans, truck payments, and mortgage have been perfect, that tells a very different story than a 640 with missed loan payments and active collections. They read the full credit report, not just the summary number. Secured debt repayment history — especially on equipment — carries the most weight.
Time in business. Two years is the threshold for most lenders. Under two years, you are a startup, and startups are inherently riskier in a lender's eyes. If you have been running your excavation company or your trucking operation for five, ten, or fifteen years, that track record carries enormous weight. A contractor who has survived multiple economic cycles, slow winters, and tough years is demonstrably lower risk than a score alone might suggest.
Revenue and cash flow. If your business is pulling in $600,000 a year in revenue and you want to finance a $75,000 Bobcat S650, the math works in your favour no matter what your credit score says. Lenders want to see that the monthly payment fits comfortably within your cash flow. Six months of bank statements showing consistent deposits — even if the amounts vary seasonally — tell a powerful story. This is especially important for contractors with below-average credit scores who have strong businesses.
The equipment itself. A 2023 Cat 320 excavator with 2,000 hours holds its value exceptionally well. That makes the lender's risk lower, which means they can be more flexible on credit requirements. A Komatsu PC210, a Volvo EC220, a John Deere 350G — these are all machines with proven resale markets, available parts networks, and dealer support. Lenders know they can recover their money on these machines if something goes wrong. Compare that to an obscure brand with limited dealer support or a heavily modified machine that appeals to a tiny market — the collateral risk is completely different.
Down payment amount. The more money you put down, the less the lender worries about your credit score. A 25% down payment on a well-maintained excavator tells the lender they are protected even in a worst-case scenario — even if the machine depreciates, their loan balance stays below the resale value. Down payment is one of the single strongest levers you have to offset a lower credit score. We break this down fully in our down payment guide. To understand how your score affects the rate you'll actually pay, see our rate comparison guide.
Existing debt load. If you already have three equipment loans, two truck payments, and a maxed-out line of credit, a lender is going to be cautious even if your score is 720. They calculate your total debt service ratio — the percentage of your monthly income that is already committed to debt payments. Most lenders want this ratio below 40-45%. If adding the new equipment payment pushes you past that threshold, the approval gets difficult regardless of your score.
How to Check Your Credit Score Before You Apply
Do not walk into a financing conversation without knowing your score. Surprises are never good in this process.
Equifax Canada lets you check your score through their consumer portal. You can also access your Equifax score through most major bank online banking platforms — TD, RBC, Scotiabank, BMO, and CIBC all offer free Equifax score access to their personal banking customers.
TransUnion scores are available free through Credit Karma Canada. Borrowell also offers free Equifax score monitoring.
Here is something important: check both bureaus. Some lenders pull Equifax, others pull TransUnion, and your scores can differ by 20 to 50 points between the two. A contractor who is 670 on Equifax might be 640 on TransUnion, or vice versa. Knowing both numbers lets you (or your broker) steer the application to the lender that pulls the bureau where your score is higher.
When you pull your reports, scan them carefully for errors. Wrong addresses, accounts that are not yours, debts that were paid but still show as outstanding, or duplicate entries. Credit bureau errors are surprisingly common — some studies suggest 20% or more of reports contain at least one error. Disputing errors and getting them corrected can bump your score by 20 to 50 points, sometimes more. It is worth spending an hour on this before you apply. The dispute process is free through both Equifax and TransUnion.
Key takeaway: Check both your Equifax and TransUnion scores before applying. Dispute any errors you find — correcting even one mistake can move your score enough to qualify for a better rate tier.
Strategies for Every Credit Tier
Regardless of where your score lands, there are concrete steps you can take to get the best deal possible.
If you are 750+ (Excellent): Shop aggressively. Get quotes from at least three sources — your bank, the dealer's captive finance program, and a broker. You have leverage, so use it. Ask about rate matching. Consider whether a shorter term at a slightly higher payment saves you significant interest over the life of the loan. Do not accept the first offer just because it seems reasonable.
If you are 680-749 (Good): Compare bank and private lender offers. Banks may still give you a competitive rate, but private lenders might offer more flexible terms or faster approval. If you are buying used equipment, a broker can often find better rates than you would on your own because they know which lenders are most aggressive in this tier.
If you are 620-679 (Fair): Focus on strengthening the non-credit parts of your application. Increase your down payment to 15-20% if possible. Prepare clean, complete financial documentation. Write a brief letter explaining any past credit issues and what has changed. Work with a broker like IronFinance who knows which lenders are most flexible in this range. The difference between lenders can be 3-4 percentage points at this tier.
If you are 550-619 (Below Average): Your down payment is your most powerful tool. Every additional 5% you put down opens new doors. Bring six months of bank statements showing strong business revenue. Target newer equipment from major brands — a 2022 Komatsu PC210 is much easier to finance than a 2014 no-name machine. Consider starting with a smaller deal to build payment history, then financing the bigger machine in 12-18 months.
If you are below 550 (Poor): Be realistic but not defeated. Focus on private lenders who specialize in challenged credit. Put down as much as you possibly can — 25% or more significantly improves your chances. Choose equipment with bulletproof resale value (Cat, Komatsu, John Deere). If possible, wait three to six months while paying down outstanding collections and correcting credit report errors. Even a 30-point improvement can meaningfully change your options. And if you do get approved at a high rate, plan to refinance in 12-18 months once your payment history improves your score.
Your Score Is Not Your Destiny
The biggest mistake contractors make is assuming a lower credit score means they cannot get financing. In the equipment world, that is simply not true. Because the machine itself is the collateral, equipment financing is fundamentally different from unsecured lending. Lenders have something tangible to recover if things go sideways, and that makes them willing to work with a much wider range of credit profiles than you might expect.
A contractor with a 590 credit score who puts 20% down on a well-maintained Cat 330, shows $80,000 a month in business revenue, and has been operating for seven years is a very different risk than that 590 score suggests on its own. Good lenders understand that, and good brokers know how to present your deal in the way that highlights your strengths.
Sources: Mehmi Group, Equifax Canada. Rate data current as of March 2026.
If you want to know where you actually stand and what your real options look like, submit an application with IronFinance. We review your full picture — not just a number — and come back with specific terms from lenders who actually want to do your deal. No cost to find out, and no obligation to move forward. Knowing your options puts you in control.
Frequently Asked Questions
Can I get equipment financing with a credit score under 600?
Yes, but your options narrow significantly below 600. Private lenders and some specialty finance companies will work with scores in the 500-599 range, but expect rates of 12-18% and down payments of 20-30%. A broker who specializes in challenged credit is your best path forward.
Does applying for equipment financing hurt my credit score?
A single hard inquiry typically drops your score by 2-5 points and recovers within a few months. If you are shopping multiple lenders, try to submit all applications within a 14-day window — credit bureaus treat this as rate shopping and count it as a single inquiry.
What do equipment lenders look at besides credit score?
Lenders evaluate your full financial picture: time in business, monthly revenue, existing debt obligations, down payment amount, the equipment itself (age, hours, condition), and whether the machine generates direct revenue for your business.
Ready to see what you qualify for?