Your Credit Score in Canada
Your credit score is a judgment about your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers. It can change from month to month based on how you treat your debt.
There are many different ways to work out credit scores. The credit-reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay.
What is your Credit Score
Benefits of a Credit Score above 750
- Lenders offer a quick approval and the best possible rates
- This score says the person is reliable and responsible with their debt.
- you may be eligible for higher lending limits on your credit cards or a higher mortgage amount.
Challenges of a credit score below 620
- your could pay a premium on your mortgage rate
- you may find it difficult to qualify for a mortgage.
- you may get turned down for new credit like Credit cards or auto loans.
How your Score is Determined
- Previous Payment history (approx. 35% of your score)
- Current level of indebtedness (approx. 30% of your score)
- Length of Credit History (approx. 15% of your score)
- Pursuit of new Credit (approx. 10% of your score)
- Types of credit available (approx. 10% of your score)
You should check your credit score at least once per year for inaccuracies. At that time its good to see who else has looked at your credit as it is recorded in your record. If there is suspicious activity with your credit, it will show there.
There are two ways you can get your credit.
- Mail = Free (slower up to six weeks and may not have a score on the report)
- Paid = instant or same day (but may cost you based on the company you choose above)
visit these links to find out more about your credit score in Canada
Government of Canada Article – Understanding your credit report and score
Government of Canada Article – Office of consumer Affairs – Take Charge of your Debt
Stay tuned for a future article on How your Score is Determined.