Your credit score is an important number than affects your ability to take out a loan, buy a house, rent an apartment and even get a job. But, it’s surprising how few people know what their score is, how it’s different from a credit report, and how they can get it.
You credit score is one number that determines how risky of a person you are to lend money too. The range is 300 to 900. The higher the score the more credit worthy you are. Lenders will offer loans at a lower rate if your credit score is high, as they know you’re at smaller risk to miss a payment. Generally speaking a score of more than 700 is considered good. If it’s more than 750 your credit score is better than the majority of Canadians.
You credit report is where all the details of your financial history going back seven years are listed. This will include any debt you are currently in and all the credit that is already available to you. This can also show how many times you have applied for credit in the past.
You can get a credit report and credit score from one of the two credit reporting agencies in Canada, Transunion or Equifax. The report is free, but there is a fee for the score. There are some lenders who offer credit scores for free.
Credit Score Steps
If you have applied for a loan and it has been turned down or you are made an inquiry about your credit score and its low there are steps you can take to improve it.
Start making payments on time. The number one way to improve your score is to pay all your bills on time. This includes your rent and utility bills.
Don’t apply for unnecessary credit cards and loans. If you do, you can been seen as a risk to lend to by creditors.
Don’t have too many credit cards or loans. If you’ve already have a credit card or line of credit don’t carry a balance of more than 75 per cent of available limit.
What Does a Bad Credit Score Do?
Here is what a bad credit score can affect.
- Your ability to get a mortgage.
- Your ability to get the best available rate.
- A job offer can be denied.
- Application for a rental can be denied
- You may be unable to rent a car.
Check your credit score once a year or when there is a big financial event coming up. Such as buying a house, a car or applying for a loan like a line of credit. This helps you fix any errors that might be on your report, as they do happen, and proactively improve your score if you need to. Also, look for errors like old information, information not related to you, updated information that’s missing that could help your score improve.
Always knowing where you stand financially will help you better prepare for big purchases like buying a home and avoid any last minute delays due to errors on your credit report.