People in Canada invest a lot of effort to make their credit score positive. In that way, they can ensure better living conditions and loan money from the bank whenever they urgently need it. However, reaching that goal is not easy at all. It requires a good plan that will allow you to manage your money properly.
For starters, it is much better to understand things in theory. In this article, we will talk about everything you should know about credit scores in Canada. The pieces of information will be quite helpful!
Credit Score Ranges You Should Know About
The condition of your credit score depends on the “points” that you get. When we talk about Canada, the score can range between 300 and 900. The ranges are not the same in every bank, but, usually, people with 800+ points will be considered as individuals with an excellent credit score. On the other hand, people with a credit score between 300 and 579 will be considered by banks as borrowers with a poor credit scores. In other words, there is almost no chance they will get a loan.
Factors that Influence Credit Score
It is not enough to have the necessary desire to boost your credit score. You need to know exactly how you should do it. The factors that influence this issue the most are well-known.
Logically, the most important ones are the payment history and amounts owed. If your payment history is good, the lenders will know whether you are a reliable borrower or not. It shows all the debts that you had (discluding the ones associated with your mortgages). No one wants to give money to someone who will delay the process.
The money you owed is actually known as credit utilization. Let’s use an example that explains everything. Let’s say that the credit card limit is $2000. The current balance on the card is $400. That means your credit utilization is 20%. Banks often like to see the total utilization is not higher than 30%.
Despite these 2 factors, there are three more of them. Those three factors are types of credit you used in the past, new credit, and length of credit history. The influence of these three factors is a bit weaker, but it is also something that lenders will put into consideration.
So, How to Increase the Credit Score?
Well, there are multiple ways how you can do that. You primarily need to pay the bills on time whenever you can. This is the main source of stress, but it is essential to be good at money management. Despite that, we already mentioned that credit utilization is an essential factor as well. Try to lower it as much as you can over time (keep it under 30%).
Another thing you need to have in mind is that old information can cost you a lot. That is the reason why you should constantly check out whether some credit lines should not be there. Despite that, if your credit report contains some negative information that you improved over time, that should be something you should change.
We highlighted some of the most essential things people from Canada should know. You have to educate yourself and try to improve your credit score. If you want to know more information, you can check out creditpicks.com after reading this article. We are pretty sure you will find a bunch of useful details there!