You and Your Score

June 12, 2019
Are you having trouble getting a loan? Have you been told you have a bad credit score? Or worse yet, have you been told your application for credit has been refused, but you have no idea why?
You and Your Score

This article will explain credit score is, who exactly is keeping score, and how you can build good credit.

Who’s Keeping Score?

The credit bureau, that’s who.

A credit bureau is a company that gathers information relating to how you have used credit in the past. In Canada, the two main credit bureaus are Equifax and TransUnion. These companies get their information from institutions that have lent you money or credit.

This information is assembled to inform potential lenders of the risk that you, as a borrower, may pose to them. For example, when you apply for a loan or a credit card, the lender will contact the credit bureau, who will send them a credit report with, among other things, your score on it. This will help them decide if they want to lend you money or not.

What’s in a Score?

Points, that’s what.

Credit bureaus use a system of points to indicate whether someone has a good credit history. Put simply, the higher your points are, the better your score is.

Some of the things taken into account when assigning you a credit score are how well you’ve paid your bills in the past, how much credit you are already using, how long you’ve had access to credit, and whether you’ve ever filed bankruptcy.

You can ask the credit bureau for your credit report anytime without affecting your credit score negatively. However, it can be harmful to your score when other parties make inquiries about your credit history, depending on the circumstances. 

How to Raise Your Credit Score

There are many things you can do to bring that score up. Here are but a few of them:

Always pay your bills on time, or at least make the minimum payment required. Never skip payments unless you’ve made specific arrangements with the lender. And if you can’t make the minimum payment, contact the lender to see what can be done to alleviate the situation.

Do not apply too often for credit, and don’t change credit cards on a regular basis. Try to stick with the ones you already have because every time you apply for a new credit card, your score can be affected negatively.

The Government of Canada, on its website, suggests using no more than 35% of your available credit to improve your credit score. The reason being that the more you use the credit that is available to you, the more lenders see you as high risk.

Finally, if you notice any discrepancies on your credit report, contact the credit bureau and clear things up as soon as possible.

So now you know why your credit score is such a big deal, and what you can do to improve yours. If you put these few basic tips into practice, you’ll be on your way to getting all the credit you want, whenever you need it.

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