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Did You Know These 6 Credit Facts?

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Did You Know These 6 Credit Facts?

Written by Lisa Rennie
Fact-checked by Caitlin Wood

Did You Know These 6 Credit Facts?


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Your credit is a crucial component of your financial well-being and plays a key role in your ability to secure loans of various types. Whether you’re applying for a mortgage, personal loan, auto loan, or home equity line of credit, your credit matters.

Looking for alternative mortgage financing? Read this.  

That’s why it’s so important for you to know as much about your credit and things that affect it in order to ensure that you keep your credit as healthy as can be. That said, there tends to be a lot of conflicting information floating around out there about credit and credit scores.

To help you make heads or tails of credit, here are some facts that you should know about it.

1. Co-signing a Loan Can Affect Your Credit Score

Even though a loan that you co-sign on might not necessarily have your name on it, that doesn’t mean your credit score can’t be affected. If all goes well and the borrower makes all payments on time and in full, your credit score should be fine or even improved. But if they stop making payments and you’re responsible to take over, your credit score can suffer.

Want to know what types of lenders accept co-signers? Find out here.

2. More Credit Isn’t Necessarily Always Bad

You’ve probably heard that taking out too many credit accounts is bad for your credit score. While that is true in many cases, it’s not always the case. Your credit score takes into account the amount of credit that is available to you compared to the amount that you have currently outstanding or are using, along with the number of credit accounts you have. In other words, having a higher credit limit can sometimes be a good thing for your credit score.

Just make sure you avoid too many hard credit inquiries within a short period of time.

3. Checking Your Credit Score Won’t Negatively Impact Your Credit Score

Many people are scared to pull their credit report because they think that it will hurt their credit score. However, you’re free to check your credit score every year and are even encouraged to do so in order to know exactly where you stand. Checking your own credit is different from inquiries made by lenders and creditors. Your own credit checks are considered “soft inquiries” and have no bearing on your credit score.

Canadian Credit ScoreCheck out this infographic for even more information on how your credit score is calculated.

4. Not Having Credit Cards Doesn’t Always Translate Into a Good Credit Score

Just because you don’t have a credit card or two doesn’t mean your credit score is healthy as a result. There’s a misconception that just because you have little or no debt that your credit score will be very high. However, your credit score is predominantly made up of your financial behaviour from the past, such as whether or not you paid your bills on time and in full or the amount of available credit you utilize.

Wondering if you can use your credit card to improve your credit score? Look here for the answer.  

If you don’t have a credit card and never had one, you probably don’t even have any credit at all, which isn’t exactly a good thing. In this case, lenders have nothing to go on when assessing whether or not you’d make a good borrower.

5. Other Creditors Besides Credit Card Providers Report to Credit Bureaus

It’s a well-known fact that credit card issuers report client activity to Canada’s credit bureaus, but they’re not the only ones. Other creditors also do the same, including less obvious ones such as utility companies, cable companies, rental companies, and even cell phone companies. If you’re on top of your payments, your credit score will be positively affected, and vice versa if you miss your payments.

Read this to learn more about Canada’s credit reporting agencies.  

6. Just Because You Have Assets Doesn’t Mean You Have a High Credit Score

Like the debt load scenario described above, your credit score won’t necessarily be higher just because you have a lot of assets under your belt. Assets don’t equate to a higher credit score.

Final Thoughts

Knowing exactly how your credit score is affected can put you in a position of power when it comes to handling your finances. The more you know, the better equipped you will be to ensure that your credit is in tip-top shape.

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