Your credit score is a measure of your creditworthiness. Your credit score shows whether you have been able to pay your credit or loan amount. It also shows how you have managed your credit and loans in the past. If you have done well on all fronts and paid your obligations on time, your credit score will be higher.
The credit scores can range from 300 to 850 credit score. The credit score of 680 or above is considered to be an excellent credit score. According to the First Foundation Residential Mortgages, the average credit score in the country of Canada is 650. However, a credit score of 700 or above should get you almost every loan option at an excellent interest rate and for higher amounts for a longer period of time.
In Canada, with a credit score of 700 or above, you should be able to get the required mortgage loan from most of the financial lending institution or the banks that are operative in your area. You should check with your banks or lending agencies and check for the latest available information on the requirements for the mortgage loans and credit for an individual.
Explanation of credit score ranges in Canada
Knowing the explanation of credit score ranges in Canada is essential for you to understand them fully well.
Getting your loan or credit card approved will depend highly on your credit score. Not everyone is familiar with the ranges of credit score in Canada, which is why familiarizing yourself with them is important. Below are the credit score ranges that you need to know.
Poor credit score ranges from 300 to 559. According to a study, almost 4% of the population in Canada has this score. This can cause difficulties when applying for loans and credit cards.
Good credit score ranges from 660 to 724. 15% of the population has this score. This credit score can help you to obtain a loan or a credit card but with added requirements.
An excellent score ranges from 750 and above. 57% of the population has this score. They can quickly obtain every loan or credit card that they need without providing requirements.
How are credit scores calculated?
The weight of each of the five categories are; 30% of amount owned, 10% is for the new credit, 15% accounts for the length of credit history, 10% is the credit mix and the last 35% accounts for the person's payment history.
The FICO score takes into consideration positive as well as negative aspects of the credit report. The percentage or the weight of any of the categories mentioned above may differ from a person to another depending upon the information available in the credit report.
The FICO score takes all of the information from your credit report. However, the banks or any other lending institution might look at your income, type of credit and employment history when you apply for a loan or mortgage.
Once a certain lender asks for a client's credit report, they can also ask for the Fico score. Other sources say that your Fico score will include 35% of your payment history, 30% of your credit utilization, and 15% as to how long have you been borrowing.
Mortgage options Canada based on credit score
The credit score is a measure of your creditworthiness. The credit score of the FICO credit scoring model can range from 300 to 850. The credit score of 850 is the highest and 300 is the lowest that you can get. Higher credit score shows high credit creditworthiness and lower credit score show low creditworthiness.
If you have a high credit score such as over 700, you will get your loan request approved unless there is a major issue with the credit payments or credit related information in your reports for the last 12 months. With a high credit score, you will get better interest rates and easy to manage terms and conditions.