In Nova Scotia, credit products are just as common as any financial tool. Car loans, credit cards, and mortgages are some of the most widely used credit products amongst Nova Scotia borrowers. If used responsibly, any of these credit tools can be an excellent way to help you improve your credit. In fact, having good credit is essential if you’d like to continue applying for credit products in the future.
The Canadian Credit Score Range
Understanding how your credit score works is a good first step toward credit improvement in Nova Scotia. As soon as you start using your first Nova Scotia credit product (likely a credit card), you’ll be assigned a credit score from Canada’s credit reporting agencies, Equifax and TransUnion. That score will be three-digits ranging from 300-900.
Want to know the difference between your credit score and credit rating? Find out here.
While every credit card company or lender will work with only one agency, a version of your credit score and credit report will be kept on file with both. Both of which are used by lenders in Nova Scotia when considering you for credit.
Credit Score of 680 – 900
This is a sign of good credit, meaning you will be more creditworthy from your lender’s perspective. With good credit, prime lenders in Nova Scotia like banks and credit unions are more likely to approve your applications. Additionally, because good credit generally means you’re also good at making loan payments on time, you’ll be perceived as less risky and will be rewarded with a lower, more affordable interest rate.
Look here to see what happens when you can’t make your loan payments.
Credit Score of 620 – 680
This is a sign of fair credit, meaning you’ll still look somewhat creditworthy. Your score may have reached this level because of a few missed or late payments and therefore your approval chances may be slight slightly lower. However, you might find it difficult to be approved with prime lenders and may have to turn to alternative or private sources in Nova Scotia. Your interest rate could also be slightly higher because the lender considers you riskier than a borrower with good credit.
Credit Score of 300 – 620
This is a sign of bad credit. Unfortunately, this may mean you are far less creditworthy, as your score could have reached this level because of a long history of late or missed payments. At this point, your only choice may be to apply with a bad credit lender. While approval might be easier, since these sources are established specifically for clients who have trouble getting credit elsewhere, your interest rate will be higher.
Factors that Can Improve (or Damage) Your Credit
Generally speaking, there are five main factors that can have both a good and bad effect on your credit. We’ve broken down them down into categories so you can see how large of an effect each component has in the calculation of your credit score.
Payment History (35%)
The strength of our payment history is especially important for credit improvement. Again, we’ll use your credit card as an example. While minimum payments are an option, it’s more beneficial to make full payments and to never miss a due date. If you do, or you make a late or short payment, you’ll be defaulting. Every time you default, you’ll incur a penalty fee and be charged interest on the unpaid amount. Your credit score will also be damaged in the process. A similar, if not worse effect will occur when you default on a large loan, like a mortgage, where foreclosure is possible after a certain number of missed payments
Current Debt Level (30%)
Along the same lines as your payment history, your debt level plays a significant role in how your credit score is tallied. Plain and simple, the more unpaid debt you have, the worse your overall credit will become. The same effect can be seen the closer you get to your credit limit on your revolving products (credit cards and lines of credit). It’s best to use less than 30% of your available credit to avoid further damage to your score.
Read this to learn about some effective debt management products.
Credit Account Age (15%)
The length of your credit history and the age of your credit accounts is also significant. When considering you for new credit, lenders in Nova Scotia like to see a long record of good payments, which proves that you’ll continue this behaviour with the product they’re about to approve you for. For example, a credit card account that you’ve been paying responsibly for a long time is far more valuable than one you opened recently, which wouldn’t really tell them anything about your credit habits.
Diversity of Accounts (10%)
It’s also beneficial to have a good variety of credit products under your belt. While less credit account types won’t necessarily damage your score, having a good mix of loans and revolving products is certainly a good way of building or improving your overall credit health. That is, as long as you’re paying them all on time and in full.
New Credit Inquiries (10%)
Applying for new credit in Nova Scotia can be a good thing when you do it in moderation. However, applying for too much new credit within a short time is not a good idea. This is because every time a lender inspects your credit report, a hard credit inquiry is performed. Soft inquiries, performed by a potential employer, landlord, or yourself, do not affect your credit score. Hard inquiries, on the other hand, reduce your score by a few points and may remain listed in your report for 3-6 years. If your bad credit gets your application denied by one lender, refrain from applying all over town. Future lenders in Nova Scotia will see your damaged score and multiple hard inquiries and assume you’re being rejected because you’re a risky client. Always wait at least a few months between applications.
Check out this infographic for even more information about your credit score.
Things You or a Lender in Nova Scotia May See On Your Credit Report
Your credit report contains all your credit-related activity over a number of years. The time each piece of information remains there depends on its level of significance. For example, while a simple credit card account will stay for 6 years, multiple bankruptcies may stay for 14 years. Since lenders in Nova Scotia can also see your credit score in the version of your report that they would have access to, they use both elements to determine your approval chances and interest rate.
Other elements listed in your report include but aren’t limited to your:
- Personal information (name, address, SIN, postal code, etc.)
- Credit rating (a grade each credit account is given according to your usage)
- Payment and debt histories
- Bankruptcies, consumer proposals, debt settlements, other delinquencies (if any)
- Employment history
Better Spending Habits for Better Credit Health
While credit improvement takes patience and lots of effort on your part, it is always possible no matter what your current credit health looks like. If your credit is terrible, it can even take years to reverse your situation. However, it will be well worth the effort when you’re finally able to get approved at a low-interest rate without a hassle. Here are a few credit improvement methods you can start with:
- Create a budget that works, listing every expense that you frequently deal with
- Request that any errors in your report be corrected by the credit agencies
- If an error is caused by identity theft, request “fraud alert” be put on your report
- Pay for credit monitoring if you feel it’s necessary
- Take on a second job or increase your income in some other way
- Consolidate all your other outstanding debts before applying for new credit
Consider These Credit Improvement Products in Nova Scotia
Are the methods above not enough? Are you looking for a credit improvement tool that’s a little bit speedier and more effective? Don’t worry, because there are plenty of different products available all over Nova Scotia which should have the desired effect, many of which are offered right here at Loans Canada. These include, but aren’t limited to:
- Credit counselling
- Secured and prepaid credit cards
- Credit rehabilitation savings programs
- Debt consolidation programs
Frequently Asked Questions
I can’t qualify for anything. How do I improve my credit score?
Will checking my credit affect my credit?
Will my credit score decrease if I have too much available credit?
Loans Canada, Your Go-To Source for Credit Improvement
No matter what your credit situation happens to be, we have a product that can help you work to improve your credit. Get started by checking out your options.
