- 0.1 Your credit scores are an important aspect of your financial profile.
- 0.2 How your credit scores are set
- 0.3 How to go from good to great (or bad to good)
- 0.4 What TransUnion credit score can you see on Credit.
- 0.5 Check credit monitoring off your to-do list with Credit.
- 0.6 The newcomer’s guide to building credit in Canada
- 0.7 How to update information on your credit report
- 0.8 Credit scores and ratings explained
- 0.9 A credit score is what lenders use to check you are able to manage your debt and tells them if you are a risk or not.
- 1 What is the average credit score and why?
Your credit scores are an important aspect of your financial profile.
They may be used to determine some of the most important financial factors in your life, such as whether or not you’ll be able to lease a vehicle, qualify for a mortgage or even land that cool new job.
And considering 71 percent of Canadian families carry debt in some form (think mortgages, car loans, lines of credit, personal loans or student debt), good credit health should be a part of your current and future plans.
High, low, positive, negative – there’s more to your scores than you might think. And depending on where your numbers fall, your lending and credit options will vary. So what is a good credit score? What about a great one? Let’s take a look at the numbers.
How your credit scores are set
Canadian credit scores are officially calculated by two major credit bureaus: Equifax and TransUnion.
They use the information in your credit file to calculate your scores. Factors that are used to calculate your scores include your payment history, how much debt you have and how long you’ve been using credit.
Pro Tip: You can view sample credit scores summaries from each bureau (see Equifax here and TransUnion here) to get a sense of what to expect.
In Canada, your credit scores generally range from 300 to 900. The higher the score, the better. High scores may indicate that you’re less likely to default on your repayments if you take out a loan.
Below you’ll see a general breakdown of credit score ranges and what each range means in terms of your general ability to qualify for lending or credit requests, such as a loan or mortgage.
Note that the ranges can vary slightly depending on the provider, but these are the credit score ranges you’ll see on Credit Karma. The best way to know where your scores stand is to check your credit report:
● 800 to 900: Congratulations! You have excellent credit. Keep reaching for the stars.
● 720 to 799: You have very good credit! You should expect to have a variety of credit choices to choose from, so continue your healthy financial habits.
● 650 to 719: This is considered good to lenders. You may not qualify for the lowest interest rates available, but keep your credit history strong to help build your credit health.
● 600 to 649: This is fair credit. History of debt repayment will be important to demonstrate your solid sense of financial responsibility.
● 300 to 599: Your credit needs some work. Keep reading for some improvement suggestions below.
How to go from good to great (or bad to good)
To borrow from Leo Tolstoy, all great credit scores are alike, but all bad credit scores are bad in their own way. That is, ideal credit scores are built on a similar set of healthy financial habits, but your scores can be damaged by any number of factors. There are many different issues that can hurt your credit, such as:
● Late or missed payments.
● Too many (or too few) open credit accounts.
● High credit card balances.
● High balances on loans.
● Too many credit applications.
The first step toward improving your credit health is avoiding getting trapped in the highs and lows of managing your credit.
Heather Battison, vice president of TransUnion Canada explains how consistency is key: “The most important factor for building and maintaining your scores is to pay your bills on time and in full each month. This activity demonstrates your ability to responsibly manage credit and can positively impact your credit scores.”
It’s also key to remember that your payment history isn’t just about paying your credit card bill. “It also includes things like your cellphone bill,” says Trevor Gillis, associate vice president of account management at TD Credit Cards.
Gillis says building good credit scores is “based on using your credit card responsibly, which means making at least the required monthly minimum payment (if you can’t pay off the balance in full), making your payments by the payment due date and keeping your credit card utilization low.”
Beware of third-party companies that claim they can quickly boost your scores. According to the Office of Consumer Affairs, only your creditors are able to alter the information on your credit file. When it comes to building good credit, there are no shortcuts.
Here’s the good-to-great news: Improving your credit health isn’t only achievable, but also the steps involved can help you establish an overall healthy financial life. Read our tips for everyday ways you can improve your credit health.
Help keep your credit scores as healthy as possible by reviewing your credit reports regularly to ensure they’re accurate. Making the decision to apply for a loan or credit card is a big deal – don’t let surprise scores get in the way of it.
There are ways to check your credit scores directly from TransUnion and Equifax. However, you’ll either be waiting for snail mail delivery (with the added risk of loss or theft in transit), or paying a fee for one-time online access (or a recurring cost for continued access).
Credit Karma gives you free online access to your credit score and report from TransUnion any time. Score!
What TransUnion credit score can you see on Credit.
Check credit monitoring off your to-do list with Credit.
The newcomer’s guide to building credit in Canada
How to update information on your credit report
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Credit scores and ratings explained
Published on Monday 04 December 2017
A credit score is what lenders use to check you are able to manage your debt and tells them if you are a risk or not.
If you already know how to check your credit score, the next question is always ‘what is a good credit score?’ It’s a good question, and one without a single answer because the three main credit referencing agencies (CRAs) in the UK all score consumers differently.
Each CRA states what a good credit score is on their websites:
- A good Experian score starts at 700, with 800 considered excellent.
- With Equifax it is 660 and above.
- And Noddle’s best indicator is a 3+ on its 1-5 rating.
If you have a good credit score, you can save yourself a lot of money on hefty interest rates, because your hard-earned credit rating will give you access to the better rates and deals on credit cards, loans, credit agreements and mortgages.
Conversely, if you have a bad credit rating, you are likely to be offered high interest rates and worse deals, or fail to qualify for credit at all.
Put simply, when you apply to borrow money the lender will assess if you are worthy of being given credit. The lender does this because it needs to know whether you can manage your debts, or whether you are likely to run into financial trouble or even default on the debt.
When deciding whether to approve your application, the lender will look at your official credit report which contains full details of your financial history. This report will be provided by one or more of the UK’s three main credit reference agencies for a fee.
This report will tell the bank, loan company or building society whether you have a mortgage, how much you owe on cards, and if you have missed any payments – be they cards, loans or mortgage payments.
Therefore, the higher your credit score, the better your chances of being approved for the most attractive credit card deals.
The importance of your credit file
As you may have realised, your credit report is incredibly important because it helps lenders decide if they should approve or decline your application for credit and what terms they can give you – beneficial or otherwise.
But as each lender has its own specific rating system, it will consider your application and any previous dealings they might have had with you to come up with a specific credit score.
This may sound a bit sinister, but contrary to popular belief, there isn’t a credit blacklist and you don’t have a single credit score. If you are turned down by one lender, you could well be accepted by another.
Someone with a spotless credit record, for example, is likely to qualify for a 0% interest credit card deal. However, if your record is blemished with unpaid debt or a County Court Judgement (CCJ), you could be turned down or charged a higher rate of interest.
It’s essential that the details held on your file are accurate. You can check your credit file once a year by requesting a copy from all three credit reference agencies – it’s worth checking all three because there are likely to be slightly different.
The Consumer Credit Act gives you the right to obtain your full statutory credit report at any time, at a cost of £2 per report, so the outlay shouldn’t be more than £6.
If you do spot a mistake on your file, contact the relevant agency and ask for a correction, explaining why it is wrong and supplying any appropriate supporting evidence.
What affects your credit score?
Your credit score is calculated by taking a number of factors into account, including:
Late payments: If you are late or you miss a credit card payment or a loan repayment, it will show up as a bad mark on your credit file.
Minimum payments: You could also find that your record is tainted if you make only the minimum payments each month, as it suggests that you are struggling to manage your debts.
IVA or bankruptcy proceedings: You will almost certainly have a low credit score if you are declared bankrupt or enter into an Individual Voluntary Arrangement (IVA).
CCJs: Lenders are wary of borrowers who have a County Court Judgment (CCJ) against their name, because these are used by lenders to claim money back in a legal procedure.
Little or no financial history: You may struggle to borrow money if you have never borrowed before, as having no credit history makes it difficult for the lender to assess your creditworthiness.
Easy access to available credit: People who borrow relatively small amounts or who prudently pay off their credit card bills in full each month are not profitable for lenders.
Access to large credit: Similarly, having access to large amounts of credit could worsen your score, as there is a possibility you might draw down a lot in a short space and struggle to service the debt.
Frequency of credit applications: If you apply repeatedly, lenders may assume you are in a financial crisis. You should limit your applications, particularly if you were recently turned down.
It’s important to understand that this information doesn’t stay on your report forever. A missed payment on your credit card will usually be wiped off after three years, and details of a CCJ or bankruptcy should remain on your file for six years.
Being refused credit is frustrating, especially because the lender doesn’t need to give you a reason. That said, you should always ask as they might give you a broad hint – which you can check on your credit file is accurate.
Always make sure that your name is on the electoral roll, as it’s one of the first checks made by lenders. They want to know exactly where you live at the time of your application, so they can get in touch should anything go awry.
Also, the timing of your application could affect your score. So don’t be surprised if you are refused credit shortly after moving home or switching jobs, as lenders look for stability and can be put off by any recent changes.
How to improve your credit rating
As there is no such thing as a credit blacklist or a universal credit scoring system, you will find there are various opportunities to improve your score. Here are our top tips
1. Register on the electoral roll
One of the easiest ways of boosting your score is getting on the electoral roll. It’s free to register on the About My Vote website – if you aren’t on it then you probably won’t get credit.
2. Demonstrate financial stability
Obviously, the best way to improve your credit rating is to manage your debts well. Don’t miss any monthly payments, stick to the payment deadline, and stay within your credit limit.
3. Check your credit report annually
Review your report each year to check all the information held about you is correct. And of course amend any errors if you spot them.
4. Close down old accounts
You might owe nothing on the cards, but the lender will look at all your available credit before it makes a decision on your application.
5. Cut financial links with previous partners
If you have any joint financial products, they could influence a lender’s decision. Ask all three CRAs to add a ‘notice of disassociation’ to your file if you have cut ties with an ex-partner.
6. Consider a credit builder card
Prove you can manage your debts sensibly and improve your score. Interest rates on credit cards for low credit scores are usually high, so only consider this option if you can keep your borrowing under control.
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What is the average credit score and why?
ВThe credit score that haunts your dreams at night and can awaken you in a cold sweat is based largely on the history of your financial life. The three major credit bureaus (Experian, TransUnion and Equifax) have their own version of the FICO score, based on the mathematical model Fair Isaac refined in the late 1970s. Each of the credit bureaus' scoring systems is slightly different, which can result in different scores for a single person. As a result, lenders generally use the middle score for reference.
Credit scores are based on your payment history, how much outstanding debt you have, the length of your credit history, what type of credit you've received and the frequency with which you fill out new credit applications. The factors that have the most bearing are payment history and outstanding debt, which account for 35 and 30 percent of your score, respectively [source: Home Equity Mortgage].
What is a good credit score? While a perfect score of 850 is desirable, you'd get about the same lower interest rate with a score of 720 [source: WKOW]. Technically, there's no such thing as a "bad9quot; credit score, since there's no universal score at which no one will consent to lend you money. You will, however, begin to feel the pinch with a score below 620. For a 30-year fixed interest loan with a FICO score of 620, for example, you may pay 7.693 percent interest. With a score of 619, the interest on the same loan could jump to 12.018 percent [source: Fair Isaac].
So 720 is the lowest good score and you can't get any lower than 300. But what's the average score for Americans? As of March 2008, Experian gave a national average credit score of 692. South Dakota had the highest average (710), and Texas had the lowest (655) [source: Rotblut]. What's the big reason behind the less-than-perfect score the average American lugs around? It turns out there are as many reasons as there are ways to hurt your credit score.
Missing monthly payments can really damage your score, as can carrying too much debt relative to your income. To keep your credit score in good shape, the general rule of 28/36 applies: A monthly mortgage payment shouldn't be more than 28 percent of your monthly gross income, and the total of the rest of your debt shouldn't be more than 36 percent of your gross income [source: Wall Street Journal]. Applying for too many credit cards can hurt Americans' credit too. Avoiding temptation can be difficult with the number of solicitations you receive -- in 2006, banks sent out 5 billion credit card applications [source: CNN].
Even with a few smudges on the average American credit score, 692 isn't bad, especially considering 720 is very good, right? Not necessarily. Ultimately, lenders are left to determine what constitutes a good score; the reporting agencies simply compile the numbers. Late 2007 and early 2008 saw the subprime mortgage fallout. Many subprime borrowers (or risky candidates) found they couldn't keep up with high monthly payments. With record numbers of loans being defaulted, lenders informally raised the lowest limit on what was considered a low-risk borrower. Whereas 680 was formerly a good enough score for someone to get a good interest rate, the score was raised to 720 in 2008 [source: Rotblut]. So, with a score of 692, the average American in 2008 is considered a subprime borrower.
For more information on credit and other related topics, visit the next page.
What Is A Credit Score or FICO Score?
Is 692 a good FICO Score? Is 692 a bad FICO Score?
Is a FICO Score of 692 good? Is a FICO Score of 692 bad?
What does a FICO Score of 692 mean? What does a 692 FICO Score mean?
What does a TransUnion FICO score of 692 mean? What does an Experian FICO score of 692 mean? What does a Equifax FICO score of 692 mean?
Different ways of asking the same question! However, you must understand how a FICO score is calculated before you can label a particular number as “good” or “bad”.
A credit score, also known as a FICO Score is a number that summarizes your credit risk, based on a snapshot of your credit report at a particular point in time. A credit score helps lenders evaluate your credit report and estimate your credit risk. The most widely used credit scores are FICO scores, the credit scores created by Fair Isaac Corporation.
What Makes Up a Credit Score?
Your FICO score is essentially made up of the following:
* Payment History – 35%
* Total Amounts Owed – 30%
* Length of Credit History – 15%
* Type of Credit in Use – 10%
How can I Rank My Score?
Scores are assigned a numeric value of between 300 and 850. Here is the general scale and what the scores may mean:
700 and above: Excellent / Very Good Credit. You are considered a low credit risk by institutions and would generally qualify for the lowest interest rates and repayment terms.
680 -699: Good Credit. You will usually be approved for loans with favorable terms.
620-679: Reasonable Credit. You are a moderate credit risk, and while you won’t usually be refused credit, you will not be able to borrow at the best rates.
550-619: Poor credit. You may have to shop around to find a lender willing to approve an application for you, and your loans will be quite expensive.
below 550: Very bad credit. You are considered a high risk customer and will have difficulty finding lenders. You will have to look seriously at some strategy of ‘credit repair’.
There are 3 completely different credit scores in the UK, so which is important?
We often get asked things like, "is 600 a good credit score?" To answer that, consider this; 600 with Equifax is not bad at all but with Experian, it is considered poor. This article covers the credit rating ranges from the top credit reference agencies. You will need access to your free credit report to see your actual credit score, so sign-up and get cracking.
Before we get going on the detail, it is worth pointing out that no lender gives away their cash on the basis of a credit score alone. There are many other factors that often come into play, including: your own history with that lender, wages, other debts, and time with current employer. So don't stress out too much with where you are at right now, just start to take responsibility for the way you are represented.
What is a Good Experian Credit Score? Answer = 881 or above (see below for Equifax)
To view your Experian Credit Score, you will need to Sign-up to Credit Expert here . The average Experian credit score is 783 in the UK. Experian is the largest of the three credit reference agencies and it's pay-monthly credit monitoring service is called Credit Expert. The top score with Credit Expert is 999 and the credit score definitions are below:
This whopper is at the top end of the Experian scale, and most lenders would regard people in this category to be very low risk. This is because they would expect very few people with credit scores in this region to have problems making repayments.
People that have a score of between 881 and 960 would most likely be viewed as low risk by lenders. This is because lenders would expect few people in this category to be experiencing serious issues with repaying their credit.
This is a slight improvement on the previous two scoring bands, as lenders would expect people that have scores of between 721 and 880 to be a moderate risk. This is because they would expect a small number of people in this category to experience severe problems with repaying their credit.
Those with a credit score of between 561 and 720 would still be classed as high risk by lenders. This is because lenders would expect a large number of people that fall into this category to have severe problems with repaying their credit.
These scores are at the lowest end of the table and people that have a credit score of between 0-560 are likely to be classed as very high risk by lenders. This is because lenders would expect those falling into this category to have severe problems with repaying credit.
What is a Good Equifax Score? Answer = 467 or Above
Equifax is the second largest of the three credit reference agencies and its top score when it comes to credit scoring is 467 or above (classified as excellent). The average Equifax credit score in the UK is 430. If you haven't already you can sign-up to Equifax here, to see your credit score. The Equifax credit scoring guidelines are as follows:
This score is at the top end of the Equifax scale, and most lenders would regard people in this category to be very low risk. This is because they would expect very few people with credit scores in this region to have issues with repayment of any debt.
People that have a score of between 420 and 466 would most likely be viewed as low risk by lenders. This is because lenders would expect few people in this category to be experiencing serious issues with repaying any debt owed.
This is a slight improvement on the previous two scoring bands, as lenders would expect people that have scores of between 367 and 419 to be a moderate risk. This is because they would expect a small number of people in this category to experience serious problems with repaying any debt they owe.
Those with a credit score of between 279 and 366 would still be classed as high risk by financial providers. This is because lenders would expect a large number of people that fall into this category to have severe problems with repaying their debt obligations.
These scores are at the lowest end of the table and people that have a credit score of between 0-278 are likely to be classed as very high risk by lenders. This is because lenders would expect those falling into this category to have severe problems with repaying debts.
How to Access Your Credit Score
Access to your scores isn't possible via the statutory report, but you can get your credit score from any of the three credit reference agencies when you join a monthly monitoring service via a free trial. Start here with your free online credit report trial.
Got a question about your Credit Score? Leave a comment below or ask a question in our forum by registering now.