Announcing The Winner of Our Financial Literacy Scholarship (Spring 2022)
We are awarding $750 to a student every semester. All you have to do is show us how financial literacy has made a difference in your life.
Most Canadians don’t think about their credit score until they need to. When it’s time to take out a mortgage or purchase a new car, this trivial little number becomes a lot more important.
In Canada, there are two agencies responsible for collecting information about your credit history, Equifax and TransUnion. Each time you open a new credit account, the company reports the information to one or both Consumer Reporting Agencies (CRAs) and they continue to collect information about your accounts as you use them. This data, along with your personal information is compiled into your credit report.
After a short period of credit use, often between 6-12 months, the credit bureaus will calculate your credit score, a number between 300-900. The CRAs each use slightly different calculations, so your score may vary a bit, depending who is providing it. If you’re hoping to secure a mortgage, open a new credit card, or even start a new cell phone plan, lenders may use your report and your credit score to evaluate your creditworthiness.
Check out what your credit score range really means.
Keeping your credit score as healthy as possible can help you obtain higher credit limits and the most competitive interest rates from lenders who see you as a reliable and low-risk client.
Check out this infographic for more information on how your credit score is calculated.
When you know how your credit score is calculated, you can use credit responsibly, hone in on the areas that need work and build your score consistently over time. The credit bureaus use 5 main factors to calculate your credit score and give each factor a certain amount of weight.
You can access your credit report and credit score anytime, by contacting one of the CRAs. Since the information reported to each one varies, with your creditors, it’s a good idea to pull reports from both companies, at least once a year.
It’s important to note that others can look at your credit file too. If you are currently seeking employment or a rental property, you should know that potential employers and landlords may take a look before they decide to hire you or rent to you. Insurance companies may also pull your report before they approve your application.
Your credit history begins to build as soon as you open your first credit account, whether it’s a loan, a credit card, or a cellular phone plan. Over time, it’s a good idea to maintain multiple accounts, and even better if you have a variety of account types since lenders like to see that you can manage payments in each area.
There are four main types of accounts that might appear on your credit report:
Maintaining diversity in the types of credit accounts you use can help boost your credit score. If you’ve already got revolving credit and would like to add an installment account, Loans Canada can help. We offer personal loans with installments you can afford. We might be able to help, even if you’ve had credit issues in the past. Ask us today about how adding a small personal loan to your credit mix can help increase your credit score.
Remember, it’s a good idea, to keep an eye on your credit all the time. Have a look at your credit report annually. Make sure that your personal information is accurate and check for errors in your accounts or account history, to help prevent identity theft and help you keep your credit score healthy.
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