Your credit score is an essential part of your financial profile. It can be used to determine your financial ability to buy a vehicle, qualify for a mortage or even get a job in certain fields.
WHY DO I NEED TO KNOW MY CREDIT SCORE?Well, if you take into account that more than 2/3 of Canadian families have debts in some form (mortgages, car loans, lines of credit, personal loans or student loans), a good credit score should be part of your current and future financial plans. In other words, if you’re planning a (big) purchase, your credit score is an important factor in the process. Moreover, your financial possibilities vary depending on how good (or bad) your credit report is.
WHAT DETERMINES YOUR CREDIT SCORE?Canadian credit ratings are formally calculated by two major credit bureaus: Equifax and TransUnion. They use the information in your credit report to calculate your ratings. Some of the factors used to calculate your credit score are, for example, your payment history, the amount of money you owe and the expected duration of a loan.
WHAT IS A GOOD CREDIT RATING?In Canada, your credit ratings generally range from 300 to 900. The higher the score, the better. High ratings indicate that you are less likely to miss payments if you take out a loan.
- 800 – 900: Congratulations! Your credit score is excellent! Maintain your spending habits.
- 720 – 799: Your credit is outstanding! You must expect to have a variety of credit choices, so continue your healthy financial habits.
- 650 – 719: This rating is considered good. You may not qualify for the lowest possible interest rates, but keep your credit history strong to help improve your credit health.
- 600 – 649: This credit score rating is reasonable. A history of debt repayment will be crucial to demonstrate a strong sense of financial responsibility.
- 300 – 599: Your credit needs work!
CAN I IMPROVE MY CREDIT SCORE?Healthy financial habits set ideal credit ratings, but a multitude of factors could damage your credit score. But many different issues can affect your credit, including:
- Late or missing payments.
- High credit card balances.
- High balances on loans.
- Too many credit applications.
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