Your Credit Score Isn't Everything

A lot of people let their credit scores define them. Your credit score does not define you, and it does not define your financial situation. It does not give you authority and it does not take authority away from you, it does not rank you against others. All a credit score does is provide a hint to where you stand financially, and how responsible you are with your debt.

How you stand financially can be described by the sum of the following factors:

– Your income
– Your assets
– Your debt
– Your debt to income ratio
– Your loan to value ratio
– Your credit history
– And yes, your credit score

When does your credit score matter?

Your credit score is relevant (but not the deciding factor) behind many new purchases.

For example:

– If you’re looking for a car loan, in all likelihood the lender will take a look at your credit score (though that’s not always the case, see why here).
– If you are in search of a home then your credit score will play a larger role, but a good mortgage broker can help negotiate your approval.
– When you want to refinance your home or obtain a home equity loan
– A good credit score is important to qualify for a low interest rate (lenders reward low-risk borrowers)

This is not an example of when your credit score matters!

If you have a bad credit score…

If you have a bad credit score, it is by no means the end of the world. At the end of the day, your credit score is just a number, and it can be improved.

There exist various credit rebuilding programs. Also, If your credit score is very low and you are having trouble even qualifying for credit cards, a secured credit card is a sure-bet option that will work towards rebuilding your credit score.

If your plan is to rebuild your credit score, know that it’s all about strategy. It’s about making responsible decisions, borrowing with the goal of improving your credit rating and living within your means so that your credit score doesn’t take any hits.

All in all, know that your credit score isn’t that big of a deal. If it’s high, then great! If it’s low, you can still sometimes qualify for the financial products you’re looking for AND don’t forget, you can always rebuild it.

Is your credit score low? Are you in need of a loan? Let us help:

Speak with a Financial Specialist

Caitlin Wood

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.