Your credit score is a three digit number that lenders use to predict your credit worthiness. Credit reporting companies calculate your score based on your payment history, how much you owe, how long you have had the credit and how often you apply for new credit. In general, the higher your score, the less likely you are to become delinquent on credit. If it is above 650, you’ll probably qualify for a standard loan. If it is lower, you may have trouble getting new credit.
Because your credit score and credit report are constantly changing, it is important to review them on a regular basis, at least once a year. Since there are two main credit reporting companies in Canada – Equifax and TransUnion – it is a good idea to check your records with both companies. This helps you identify and correct any inaccurate information, detect any fraudulent activity and gauge your overall credit health.
If you are planning on applying for a mortgage, it is important to check your report a few months in advance. If your credit score is under 650, your mortgage options will be reduced, and you’ll pay a higher interest rate on your loan. We can offer simple little tips to help your credit score improve.