Your credit scores are an important aspect of your financial profile.

Your credit scores are an important aspect of your financial profile.

Your credit scores are an important aspect of your financial profile.

They can be used to determine some of the most important financial factors in your life, such as whether or not you can lease a vehicle, qualify for a mortgage, or get a job.

And, considering that 71% of Canadian families have debt in some form (mortgages, car loans, lines of credit, personal loans, or student loans), good credit health should be part of your current plans.

Highs, lows, positives, negatives – there’s a lot more to your odds than you think. And depending on where the numbers fall, your borrowing and credit options will vary. What is a good credit score? And an excellent one? Let’s look at the numbers.

How your credit scores are determined

Canadian credit scores are officially calculated by two major credit bureaus: Equifax and TransUnion.

They use the information in your credit report to calculate your scores. Factors that are used to calculate your scores include your payment history, how much you owe, and how long you’ve been using credit.

Pro Tip: You can view examples of credit score summaries from each bureau (see Equifax here and TransUnion here ) to fully understand what to expect.

What do the numbers mean?

In Canada, your credit scores generally range between 300 and 900. The higher the score, the better. High ratings may indicate that you are less likely to miss your payments if you take out a loan.

Below is a general breakdown of credit score ranges and what each range means in terms of your overall ability to qualify for a loan or credit, such as a loan or mortgage.

Note that the ranges may vary slightly by the provider, but these are the credit score ranges you will see on Credit Karma. The best way to find out where your scores stand is to check your credit report:

  • From 800 to 900: Congratulations! Your credit is excellent. Keep doing what you are doing.
  • From 720 to 799: Your credit is very good! You should expect to have a variety of credit choices, so stick to your healthy financial habits.
  • From 650 to 719: This rating is considered good with lenders. You might not qualify for the lowest possible interest rates but maintain your strong credit history to help improve your credit health.
  • 600 to 649: This rating is reasonable. A debt repayment history will be important in demonstrating a strong sense of financial responsibility.
  • From 300 to 599: Your credit needs work. Keep reading the improvement suggestions below.

How to go from good to great (or bad to good)

To borrow from Leo Tolstoy, all great credit ratings are alike, but all bad credit ratings are bad in their way. That is, ideal credit scores are established by a similar set of sound financial habits, but your scores could be damaged by a multitude of factors. Many different issues can hurt your credit, including:

  • Late or missing payments.
  • Too many (or not enough) open credit accounts.
  • High credit card balances.
  • High loan balances.
  • Too many credit applications.

The first step to improving your credit health is to avoid getting trapped in the highs and lows of managing your credit.

Heather Battison, Vice President of TransUnion Canada explains the importance of consistency: “The most important factor in establishing and maintaining your ratings is paying your bills on time and in full every month. This activity demonstrates your ability to manage credit responsibly and can have a positive impact on your credit scores. »

It’s also important to remember that your payment history isn’t just about paying your credit card bill. “It also includes things like your cell phone bill,” said Trevor Gillis, associate vice president of account management for TD Credit Cards.

Gillis says building good credit “is all about using your credit card responsibly, which means making at least the minimum monthly payment (if you can’t pay the full balance), paying bills on time, and keeping your credit card usage low.

Beware of third-party companies that claim they can boost your ratings quickly. According to the Office of Consumer Affairs, only your creditors can change the information in your credit file. When it comes to establishing a good credit history, there are no shortcuts.

Here’s the good to great news: Not only is it possible to improve your credit health, but the steps involved can also help you establish an overall healthy financial life. Read our advice on daily ways to improve your credit health.

last line

Help keep your credit scores as healthy as possible by periodically reviewing your credit reports to make sure they’re accurate. Deciding to apply for a loan or a credit card is no small feat – don’t let surprise odds deter you.

There are ways to check your credit scores directly with TransUnion or Equifax. However, you may have to wait for delivery by post (with the increased risk of loss or theft in transit) or pay a fee for one-time online access (or a recurring fee for continued access).

Credit Karma gives you free online access to your TransUnion credit scores and reports anytime. Excellent!

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By Cary Grant

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