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If you’re looking to buy your first house, have dealt with debt in the past, or are simply trying to take control of your overall financial health, understanding your credit scores can be helpful. But what about good credit? Everyone wants to know, what is a good credit score? And who decides whether or not your credit scores are good?
You’re not alone if you don’t know everything you should about your credit score, below we’ve compiled everything you need to know about your credit score.
What Is Considered A Good Credit Score?
Credit scores range from 300 to 900, with 650 being the minimum credit score needed to get approved for conventional loans. A “good” credit score is 660 or above, and an “excellent” score is 760 or above.
Why Is A Good Credit Score Important?
The higher your credit scores, the more financial flexibility you will have at your fingertips. You’ll be able to access better financial products from lenders and will be able to take advantage of a lower interest rate. Higher credit limits and more competitive reward programs may also be awarded to consumers with “good” credit scores.
Consumers with “good” or “excellent” credit scores are typically highly favoured by creditors because they pose less of a risk for defaulting on loan payments.
Who Decides If You Have Good Credit?
Now that you know what good credit is and why it can be important in certain financial situations, who decides if you have good credit? There are a variety of different scoring models used by creditors and lenders, this means that the type of credit score considered to be good by one lender maybe not be the same for another lender.
As we explain above, 660 and higher is generally considered a good credit score range. Just remember that lenders have their own unique criteria. A credit score of 660 may be a good indicator of a borrower’s creditworthiness to one lender, while another lender may only require a credit score of 650.
How To Check If Your Have Good Credit?
In Canada, if you want to check our credit you have a variety of options to choose from. Equifax, one of Canada’s credit reporting bureaus, offers all consumers free access to their credit score and credit report. TransUnion offers consumers in Quebec free access to their credit score.
Consider a Third-Party Credit Score Provider
You can also choose to check your credit via a third-party provider.
|Cost||Credit Score||Credit Alerts||Link|
(with credit monitoring)
Note: Keep in mind that all these credit score providers may use different scoring models. This means that your score will likely be different, depending on the provider you choose.
Can Good Credit Affect My Daily Life?
Credit scores are used by a variety of companies including potential landlords, banks, lenders, and insurance companies, to evaluate your credit creditworthiness. This means that your credit scores play a role in your ability to get approved for a loan, new credit, and even a new apartment.
Can Good Credit Affect Your Ability To Qualify For A Loan?
Your credit scores play a big role when a bank or lender is deciding whether or not they want to approve you for a loan. Your credit scores can not only affect your ability to qualify for a loan, but they can also affect the terms of your loan including the interest rate, term length and loan amount.
With good credit, you’re likely to qualify for better loan terms than someone with poor credit. If you are considered a high credit risk, you can expect a higher interest rate, a lower loan amount and overall less flexible loan terms.
Can Good Credit Affect Your Credit Card Approval?
Most credit cards companies have minimum credit score requirements. Generally, more premium credit cards will have higher eligibility requirements such as a good to excellent credit score. These credit cards often have better rewards and perks than other credit cards
While many credit cards offer rewards programs, the types of rewards that you can tap into can improve with a good credit score, which can help you save money and earn higher rewards.
Can Good Credit Affect Your Ability To Get A Job
Some employers look at applicants’ credit scores when assessing who to hire and who to politely decline. They typically want to see applicants with a high credit score before hiring someone, especially when it comes to positions in the financial sector. They might see bad credit scores as a sign of irresponsibility and therefore might choose to hire someone else.
While there are certainly many factors that go into the decision of who to hire for a certain position, having good credit can be just enough to put you on top. However, do remember that a potential employer is required to get permission from you before authorizing a credit check.
Can Good Credit Affect Your Insurance Premiums?
Not only will good credit afford you lower interest rates on loans, but it will also allow you to take advantage of lower insurance premiums. Insurance comes in many forms including house insurance, auto insurance, life insurance, and health insurance. Insurance premiums can cost quite a bit, but if your credit score is healthy, you may be able to snag lower rates, saving you money over the long haul.
Insurance providers usually check your credit score before they approve your application and provide you with a premium rate. A good credit score tells them that you’ll be less likely to file a claim in the future, which is why they’re willing to provide you with a lower rate.
Can Good Credit Increase Your Chances Of A Lease Approval?
If you’re filling out a lease application on an apartment unit you’ve got your eye on, a good credit score can help seal the deal for you. A lower score, on the other hand, could make it more difficult to land a lease. Lenders aren’t the only ones who pull credit reports. Landlords do the same.
Like lenders, landlords want to make sure you’ll be able to make your rent payments every month, and a good credit score will provide them with more assurance that you will.
A potential landlord will also need to check your credit history as they need to assess whether you are a credit risk. A bad credit score may show them that you can’t be trusted to pay your rent on time and therefore they might rent to someone who is less of a risk.
How To Maintain A Good Credit Score?
There are plenty of perks associated with having a good credit score. But credit scores fluctuate with time and information that is reported to the credit bureaus. Depending on the type of information reported, it can positively or negatively impact your credit scores. That’s why it’s important to be diligent with your financial habits so that you can maintain your good credit scores. Here are some ways to help you maintain “good” credit.
- Pay Your Bills On Time – Your payment history generally accounts for 35% of your credit scores. As such, missed or late payments can negatively affect your credit. To help maintain or build your credit, paying your bills on time and in full is crucial. This includes loan payments, credit card payments, utility bills and even cell phone bills.
- Keep Your Debt-To-Credit Limit Low – The amount of debt you have in comparison to your credit limit is another factor that can heavily influence your credit scores. Balances that are close to your credit limit can impact your credit scores. In general, lenders like to see a low debt-to-credit ratio (around 30%).
- Don’t Open Too Many Credit Accounts In A Short Period Of Time – When you apply for a credit product, the lender will pull your credit report which is known as a hard inquiry. Too many hard credit checks can negatively affect your credit and could indicate financial distress to future lenders, which may result in your loan or credit application being rejected.
- Keep Old Accounts Open – Your credit history is another factor that is commonly included in the calculation of your credit scores. Try to keep old credit card accounts open, especially if they do not have an annual fee. Simply keeping these accounts open and active can help establish your credit history which can help build and maintain your good credit.
For more tips on improving your credit take a look at this article.
Whether you’re trying to get a loan, a credit score, or rent an apartment, good credit may play an important role. Not only that, but good credit scores can lead to faster loan approvals and better loan terms including lower interest rates and flexible payment options. While having a good credit score isn’t worth taking on debt or losing sleep, working to build a healthy credit history can be an important part of creating a balanced financial life.
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