What comes to your mind anytime you think of success is financial security. If you’ve recently moved to Canada, you might opt to continue with your education or get a new job as a way of pursuing success.
Nonetheless, having a great job or saving some money isn’t the real guarantee of financial security. You need a good credit score as well.
Banks, employers, landlords, and businesses look at your credit score before offering loans, mortgages, insurance packages, and rental agreements. If you don’t know much about credit scores, then this article is for you.
The Meaning of a Credit Score
As a consumer, you determine the overall score by having the history of your financial transactions. Credit agencies must keep all the records of your payment history. This ranges from the number of credit cards you have to the amount you owe.
The lenders will use the information they get from your credit report to determine your credit worthiness. From the information they’ll evaluate the risk of lending you money.
Impact of a Good Credit Score
You need to understand the terms used to describe credit scores. These are; bad, fair, good, and excellent. You should know what each of these terms means and their ranges. You’re in a better position of getting loans from lending institutions if you have a good credit score.
With a good credit score, you can get a credit card and also rent an apartment. A good credit score also allows you to save some money to repay your loan because of your credit card’s lower interest rate.
How to Build Your Credit Score
You can build and establish a credit score by practicing healthy spending habits. Ensure you make small purchases that you can pay off and on time.
Your payment history largely determines your credit history. Lenders pay much attention to whether you normally make your loans on time or not.
You also have to maintain your credit limit if there’s any on your card. Maintain a minimum number of credit cards since creditors will be reviewing every new card you lay your hands on.
Several Things Don’t Impact Your Credit Score
Your credit report has its limits. Your credit score is strictly calculated based on those limits. The credit reports only concentrate on your payment history. It only focuses on how you’re paying back the money that you promised you would pay.
But lenders also have their way of evaluating you. They’ve their way of getting information aside from the credit reports. If your reports are not so promising, you can still opt for a no credit check loan in Canada whenever you need financial aid.
How to Track Your Credit Score
There’re three credit bureaus where you can derive your credit score. They include Experian, Equifax, and TransUnion. These reports act as a baseline to your credit score by providing information to your lenders.
Two major credit companies will look and analyze other financial factors which result in your credit score.
Lending institutions can request access to your credit score from Experian or TransUnion. They’ll use this to determine whether you qualify for a loan or not.