- Posted by HomeHow
- On November 17, 2018
- 0 Comments
Credit scores are determined by credit reporting agencies to help lenders predict the likelihood that individuals will pay their bills.
Credit Score Factors
Whether your late on your payments or you miss a couple now and then, these actions can greatly impact your credit score. It is so important to keep track of WHEN you pay and HOW much you pay.
How much of the total available credit is being used on your credit cards and lines of credit can tell lenders about your financial situation.
For example, if you have a credit card limit of $10,000; but you constantly have an unpaid balance of $9,000, this situation will have a negative impact on your credit score.
Length of your Credit History
The longer credit account history you have (credit card, line of credit etc.) the stronger proof of your ability to handle debts.
History of Bankruptcy or Collection Issues
Prior history of bankruptcy, collection issues or other derogatory public records may be considered risky and will have a significant negative impact on a credit score.
Frequency of Credit/Loan Application
Your credit report will show how many times and how frequently you have applied for a loan/credit card. Lenders perceive “frequent credit application” as a sign of financial distress.
Calculation of Credit Score
The above factors all contribute to the calculation of your credit score. Credit score ranges from 300 to 900, with a higher score being better.
If you have a credit score higher than 680, you will have a lot of choices with lenders and better bargaining power for better rates and mortgage terms.
Knowing your Credit Score
You can assess your own credit score through the two national credit bureaus in Canada: Equifax Canada and TransUnion Canada. HomeHow can inquire your credit score on your behalf without leaving an inquiry record on your credit report.