What Is a Credit Score?

Your creditworthiness is shown by a three-digit number called a credit score. Your credit history, which takes into account your payment history, credit utilization, length of credit history, types of credit, and most recent credit inquiries, is used to compute it. Lenders, creditors, and financial institutions use your credit score to assess your creditworthiness and determine whether to approve your loan, credit card, or mortgage application.

How Is a Credit Score Calculated in Canada?

Equifax and TransUnion are the two credit bureaus that gather and keep track of credit information in Canada. The credit scores generated by each bureau may differ slightly, despite the fact that each employs a comparable scoring system.

The following five factors all affect your credit score in Canada:

• Payment history (35%)

This element takes into account whether or not you have made on-time, complete payments on your credit. Your credit score may suffer if you make payments late or miss them altogether.

• Credit utilization (30%)

This measure takes into account how much of your available credit you are really using. Using an excessive amount of your credit limit may be a sign that you pose a bigger risk to the lender.

• Length of credit history (15%)

This element takes into account the number of credit accounts you have and how long you’ve had them. More stability and fiscal discipline may be indicated by a lengthier credit history.

• Types of credit (10%)

This element takes into account the various forms of credit you may have, including credit cards, loans, and mortgages. Your capacity to manage various debt types can be shown by having a variety of credit types.

• Recent credit inquiries (10%)

This element takes into account the frequency of your most recent credit inquiries. You may be a higher-risk borrower if you have too many credit queries because it shows that you are actively looking for credit.

What Is Considered a Good Credit Score in Canada?

Credit scores in Canada range from 300 to 900; higher scores denote better credit histories. The following are the credit score ranges:

• 300 to 599: Poor
• 600 to 649: Fair
• 650 to 699: Good
• 700 to 749: Very good
• 750 and above: Excellent

In Canada, a credit score of 650 or more is typically regarded as good. It is crucial to remember that each lender or creditor may have their own standards for determining creditworthiness, so a score that is satisfactory to one lender might not be for another.

A good credit score can increase your ability to access credit at a cheaper interest rate, qualify you for better credit card benefits, and increase the likelihood that your loan or mortgage application will be granted. A low credit score, on the other hand, can make it challenging to obtain credit or lead to higher interest rates and costs.

Rebuild Your Credit Today!

National Debt Relief can be of assistance if you are struggling with debt or wish to raise your credit score. Our team of experienced debt relief professionals can collaborate with you to create a personalized strategy to assist you in managing your debt and restoring your credit.

We provide a variety of debt relief services, such as credit counseling, debt settlement, and debt consolidation. Our mission is to assist you in getting out of debt and enhancing your financial situation.

To find out more about how we can assist you in restoring your credit and achieving financial freedom through Debt Relief Program in Ontario, get in touch with National Debt Relief and call us right away. Let us assist you in taking charge of your debt so you can begin your path to a brighter financial future.