How Important is your Credit Score?
In Canada, there are two credit reporting agencies, Equifax and TransUnion. These agencies create credit reports and credit scores for Canadian Consumers based on the information that creditors supply them.
Here are some of our suggestions on how to attain a speedy credit score boost:
- First things first, you should pay down your credit cards. We recommend paying them down so you’re only using 30% of your limits.
- Keep your old cards because older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. You should use them cards periodically and then pay them off.
- You should always dispute any mistakes or situations that may harm your score. Once you have resolved the issue you should provide documentation to either agencies and have them update your bureau.
- Co-signing can affect your credit. If you co-sign on a loan, you may have a responsibility for that debt. If the other party misses a payment or a few, your credit score could be affected just like theirs.
- Many creditors look at how much you owe compared to how much debt you have available. Carrying a great amount of debt and making the minimum payments may not, by itself, increase your credit score.
- When you become divorced you can contact your creditors and notify them that you would like to convert your joint accounts into individual accounts. They will inform you on what steps to take to achieve this.
Closing credit cards does not erase the history you had on that card. In fact, negative credit card accounts stay on the report for 6 to 7 years from the date the account first went delinquent. Both Transunion and Equifax report different information in different formats so you may want to keep an eye out on both agencies.
You should have at least 2 credit cards with limits starting from $2,000.00 and up. When obtaining a mortgage you must have 2 credit cards with a 2 year history on the bureau in good standing. This can also include a car loan, unsecured line of credit etc. Please note that car leases are still considered a debt on your bureau.
Bottom line: the higher your credits score the better your credit is.
- Below 600 – not good
- 600 to 650 – not the best
- 680 and up – good credit
- 700 to 900 – very good credit
Some credit scoring models may use a slightly different range, but higher scores will always be better than lower ones.
As mortgage brokers, we have expertise in credit counselling and are happy to work with you to create a realistic budget. Helping you improve your credit score ensures you to get into the market and find the property that's right for you!