Do You Know Your Credit Rating Score?

Posted on December 11, 2012 by Kathi Bridge, One of Thousands of Money and Finance Coaches on Noomii.

Your credit score reflects your financial health at a specific point in time. It indicates how much of a risk you are to lenders, compared to other consumers.

The two main credit-reporting agencies in Canada are Equifax and TransUnion Canada. These two agencies use a scale from 300 to 900, the higher your score, the lower the risk you are to lenders. The lenders will also set the interest rate you pay based on your score. Hence keeping up your credit rating means lower interest rate on mortgages, auto loans and credit cards.

I won’t get into the details of what all the ratings and codes mean on your credit report. However here are simple steps to take to ensure that your credit score remains high:

Pay your credit cards and all your bills on time.
Try to pay your bills in full by the due date. If you can’t do this you must pay at least the minimum payment required.
Try to pay your debts as quickly as possible.
Try to keep your balances well below the limit on your credit cards. The higher the balance, the more impact it has on your score.
Do not make too many applications for credit in a short period of time. When many lenders check your credit rating in a short timeframe, it can have a negative effect on your rating. This does not apply when you are checking your own report.
You need to have a credit history in order to have a high score. You may have a low score because there is no history showing that you have owed money and paid it back on time.
You can go to both websites above and ask for your credit report for free (they will mail it to you). It is important to check for accuracy on your report, and to know what your score is to see if there is room for improvement.

For more information, you can also go to Industry Canada: http://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/ca02197.html