Most Canadian adults have a “credit bureau file” that contains information around all credit accounts they own (including limits, balances, payment history, etc.).
There are two major credit bureaus in Canada, TransUnion and Equifax. Both companies review credit files to calculate credit scores. Factors taken into consideration during your credit score evaluation include:
- The total amount of debt you have.
- Your payment history on debt.
- Length of time you have had credit.
So, what makes up a good credit score? The higher the number calculated, the better! Canadian credit scores range between 300-900.
High credit scores are good and reveal that a person is unlikely to default on loan repayments. Lenders review these scores before approving any loan, mortgage, or credit product.
A good score also helps you receive the best interest rates for lending products. Below is an overview of the rankings of credit scores:
- 900 – 760 – Excellent
- 759 – 725 – Very Good
- 724 – 660 – Good
- 659 – 560 – Fair
- 559 – 300 – Poor
It’s important to note that the reasons behind “low” credit scores do vary. Some issues that can create a “bad” credit rating include:
- Missed or late payments.
- High balances on your credit cards.
- Too many, or sometimes too few, opened credit accounts.
- A high balance on loans.
Curious about your credit score? Here are two companies where Canadians can access their credit scores for free.
Credit Karma: Gain access to credit scores and credit reports through TransUnion.
Borrowell: Gain access to monthly credit scores and credit reports through Equifax.
You can pull up your credit score by filling out an online form. Your social insurance number and credit card are not required. You will have to answer questions to offer proof of identity.
THE BOTTOM LINE
The entire above process takes about three minutes (or less) to do. Once done, you can gain an instant snapshot of your current credit.