A credit score: what is it?
Your credit ratings in Canada typically vary from 300 to 900. Better results result in higher scores. If you take out a loan, high scores can suggest that you won’t default on your payments as frequently. Simply put, your credit score tells lenders how likely you are to repay their loans. People with a history of late payments are not those to who creditors want to lend money. Your score aids lenders in determining your financial reliability. A lender often considers a score between 660 and 725 to be good
Determining your credit score
Equifax and Transunion both offer immediate access to your credit record and score. These are Canada’s two primary credit reporting companies.
How may the state of my credit affect my life?
If you ever want to establish a business, buy a car, or purchase your own home, what should you do first?
Bad credit could prevent you from experiencing some of life’s most significant milestones. Even if you have the means to purchase a home or car, a lender may view you as a high-risk borrower if you have low credit. Higher interest rates are typically the effect of this.
In some cases, having negative credit may even result in you being turned down for a cell phone contract or a particular job opportunity!
How did my credit go so bad?
The reason you have bad credit can be simple; you continually miss payments to pay back the money you borrowed. The reason you have bad credit can be more complicated; the credit bureau misreported something on your record.
This is why it’s important to know if you have bad credit and, more importantly, why you have a bad credit rating.
Here are some factors that might have led to your having bad credit:
- Continually missed payments
- Only pay the minimum amount due
- Too many open credit accounts
- High balances on your credit card
- Filed for too many credit applications
- Never use your credit card
- A high debt service ratio (you owe too much concerning how much you make)
- The credit bureau misreported your credit score
Because there are so many variables that can lead to bad credit, we recommend that you request your credit report once a year.
