Credit scores are a bit nebulous but can greatly impact whether you are approved for a loan and how much interest will be charged.  Where they come from and what affects them are not very intuitive and may surprise you.  Knowing more can help you leverage your score and put you in a better position when it comes to borrowing money.

1. There are two credit-reporting agencies in Canada: Equifax and TransUnion. Your credit score may vary between the two. Lenders may check one or both agencies when you apply for credit.
2. Your credit score is listed in your credit report.
3. Credit scores range between 300 and 900 with the Canadian average being 650.
4. Your credit score may be used by insurance companies, mobile phone providers, car leasing companies, landlords and potential employers.
5. Five factors affect your credit score: length of credit history, how much of your limit you have used (credit utilization), the mix/types of credit you hold, the frequency you apply for credit, your payment history.
6. Mistakes and omissions are not uncommon and both agencies have a process to report errors and have them corrected.
7. Very roughly, credit scores of 700+ can offer a higher chance of loan approval, greater borrowing limits, and lower or “preferred” interest rates and insurance premiums.
8. Credit scores are continuously evaluated and adjusted. If you have missed a payment in the past, your score can be raised/rebuilt.  See #10.
9. Checking your credit score yourself regularly is a good idea and will help detect errors, monitor improvements, and identify fraud. These are considered “soft” enquiries and will not affect your score.
10. To increase your credit score: make payments on time, pay the full amount owing, use 35% or less of your available credit, hold a variety of credit types, apply for new credit sparingly.

Please let me know if you have questions on your credit or mortgages at any time.  If you have a purchase in mind, or a mortgage you’d simply like to review given the recent changes to rates this last while, I am here to help!

Adapted from DLC Marketing