You probably already know that it’s important to keep your credit score high since this rating impacts your ability to borrow money. Your creditworthiness helps lenders determine the level of risk you pose as a borrower. If you have a solid credit score, lenders believe you’re more likely to make payments on time. But what exactly is a good credit score and why’s it important to understand your credit report?
Your credit report is essentially a listing of your outstanding debt, including credit cards, lines of credit, car loans, student loans, and so on. You’ll also find liens and judgments on your credit report as well as your address and possibly your work history. By understanding what appears on your report, you can help correct anything that puts you in a negative light.
Canada’s two credit reporting agencies are Equifax Canada and TransUnion Canada. Both agencies have a credit history file on anyone who has ever borrowed money. Every time you borrow money or make a payment on a loan or credit card, the lender then reports information about the transaction to these two agencies.
But it’s important to pay attention to reports from both agencies since they can differ. Request a copy of your credit report from both agencies at least once a year. You can make these requests online. Not only will this check help verify that your personal information is up to date, but it will also ensure that you haven’t been the victim of identity fraud.
The information displayed on your credit report varies based on your creditors and what they’ve reported about you.
What’s a good credit score?
Credit scores range from 300 to 900. The higher your credit score, the better, as the mortgage products and interest rate that you’ll qualify for are often determined by your credit score. Each lender sets its own guidelines in terms of the minimum credit score required but, for the most, a respectable score falls within the mid-700s. Most banks and traditional “A lenders” require a minimum credit score of 680.
Your credit report is a working document. This means that you have the ability, over time, to repair any damaged credit and increase your credit score.
Have questions about how to read your credit report or boost your credit score? Answers are a call or email away.