There are enough options for you to increase your credit score in Canada. A combination of them ensures that your credit score rises steadily.
Lenders take into consideration your credit score when assessing you for loans. A lower credit score attracts a high-interest rate, and you might need collateral, a large down payment or a co-signer for you to get it. Therefore, it is necessary for you to keep increasing your credit score in Canada to qualify for favorable loan terms.
Fix errors in your credit report
Credit agencies can make mistakes in your report that could put you at risk of missing out credit facilities. Notifying the credit bureau of any errors for correction is important. Any credit information that cannot be verified by lenders will always be eliminated from the credit report. You should support your dispute to the credit agency with documentation, preferably issued to you by the lender.
Use credit sparingly
You should avoid opening multiple credit accounts at the same time since it raises an alarm on your financial management. Moreover, hard pulls are conducted by lenders on your credit score each time, which reduces your rating progressively. It is worse if you have a short credit history.
In Canada, the mortgage payment is usually not reported in your credit report. Therefore, it is necessary for you to ensure your loans, credit card, and lease payments are made first. It does not imply that you should delay paying your mortgage. Your lender could report you for late payment or default to the credit bureau, which could damage your credit score.
What is a credit score in Canada
If you are one of the many people who is asking about what is a credit score Canada, then you definitely should read the information below.
It is always important to monitor your credit score for you to know where you stand when it comes to lending companies. Fortunately, you can now check your credit score for free with the use of Borrowell because they have partnered with Equifax Canada. Get to know more about these two companies by reading the information below.
Borrowell is a fintech lender company in Canada which offers fast, friendly, and fair loans to people who need it the most. They have fix interest rates that are affordable.
Equifax gathers credit reports, which include your payment history, your debts, and the length of the credit that you already have. They have grown from a credit consumer company to a leading provider of credit score around the globe.
How are credit scores calculated in Canada?
In Canada, credit scores are calculated to show your creditworthiness which is useful for the lending institutions to identify the level of risk involved in lending you loans such as mortgage or home loans. The credit score ranges from 300 to 850. Higher the score, better are chances of you repaying your loans and hence, lower the risk for the lenders.
The credit score is determined by giving your payment history the 35 % weight. Followed by, the amount you already owe as 30%. The weight of 15% is given to the length of your credit history. The new credit applications that you have made and the type of credit that you have used in the past account for 10 % each.
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.