WHAT IS A GOOD CREDIT SCORE?
- A good credit score starts at a base rating of 650 and it goes as high as 900.
- The higher your score the more trustworthy you seem to banks, lenders,landlords and employers.
WHAT IS THE CREDIT SCORE RANGE CANADA USES?
EXCELLENT 750 & ABOVE
BAD 550 & BELOW
Consumers with excellent credit score will likely have no or very few late payments in their credit report, will regularly pay off their balances in full, and will have a low credit utilization across all their lines of credit.
Consumers with a good credit score in this range still enjoy some of the best financial products and interest rates available. This credit score means you are generally financially responsible: Canadians who sit in this credit score range make most of their payments on time with only the occasional late payment on rare occasions.
Consumers with fair credit score will certainly experience higher interest rates from lenders. Those on the mid to lower end probably have been late on their payments multiple times to more than one lender and may have defaulted on a loan at some point.
Consumers with below average credit will face higher interest rates for the lines of credit they are approved for, which is costly over time.They also are not eligible for the more lucrative credit cards that provide accelerated levels of cash back and rewards
Consumers with poor credit score unfortunately have a significantly damaged credit history. Perhaps you have defaulted on multiple loans, your debt is very close to your credit limit, or you have declared bankruptcy, which will be on your credit report for at least seven years. In this range you will have a difficult time obtaining credit or getting approved for a loan.
The impact of your credit score
Getting a credit card ---A good credit score gives you access to premium cards with generous rewards and exclusive perks. And the higher your score gets, the more competitive your credit card options become.
Qualifying for a loan---A good credit score helps you qualify for the lowest interest rates on personal loans and car loans—
Renting a home---A good credit score improves the chances of your rental application being accepted.
Buying a home-A good credit score can help you get a lower mortgage rate from a major bank or other lender. The best rates are usually reserved for consumers with good credit scores, but you can also negotiate a cheaper mortgage. Remember: a high score shows that you’re a low-risk borrower.
Borrowing and repaying your credit card bill on time, in addition to not carrying a large balance is one of the most important things you can do to build up a great credit score.
The card companies report your payment behaviour to the credit bureaus.
Keeping an overall low credit utilization is key to keeping a high credit score.
However having at least one account with a high balance can hurt your score even if your overall utilization is low.Make sure your score wont suffer by spreading out a low utilization across all your accounts.
Making payments on time is the most important aspect of a credit score.
Your credit history should show no recent late payments if you want to push your score into the excellent range
Negative information can stay on your credit report for seven years, though the older the information, the less of an impact.
The amount of credit you are using.is the next greatest factor in your credit score and should be under 30 percent of your available credit limit. The lower the better
Lenders look at the total amount that you owe on each of your accounts compared to your credit limit, and the total that you owe overall compared to your overall credit limit.
TYPES OF CREDIT--10%
Different types of accounts under your name known as "credit mix" includes revolving credit, such as credit cards, and installment loans such as mortgages.
To get your score into the excellent range, you should make sure you have multiple types of credit in your credit history.
RECENT CREDIT INQUIRIES--10%
Be careful about applying for new credit cards. Make sure you can qualify before you apply and try not to apply for a lot of cards all at once, as this can cause your score to drop.
This is often referred to as HARD INQUIRIES
LENGTH OF CREDIT HISTORY--15%
To achieve an excellent score, you need to be especially careful about shutting down long-standing accounts, and you shouldn’t open too many new accounts at once, since this can drag down the average age of your accounts.
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HOW DID I BUILD MY CREDIT SCORE FROM 500 TO 850
WHAT FACTORS INFLUENCE CREDIT CARD THE MOST?
HOW DO YOU INCREASE YOUR CREDIT SCORE ?
I built my credit score from 500 to 850.
It took me one year to work on it.
I followed the same procedure every month.
VANTAGESCORE SCORING CRITERIA
Payment History (Extremely Influential)
Credit Utilization (highly influential)
Length of Credit History and Type of Credit (HIGHLY INFLUENTIAL)
Total debt owed (moderately influential)
Recent credit inquiries (less influential)
Available credit (less influential)
WHAT ARE SOME OTHER HABITS FOR BUILDING A GOOD CREDIT SCORE?
Pay all of your bills on time, every time. And return your credit card balances to zero every month.
If you carry credit card balances from month to month, work on paying them off. Avoid using more than 30 percent of your available revolving credit at any one time.
Do not apply for several lines of credit at once, and don’t take out an installment loan just to improve your credit.
WHAT DETERMINES AN EXCELLENT CREDIT SCORE?
The FIVE FICO scoring criteria
Payment history (35%)
Credit utilization and total debt owed (30%)
Length of credit history (15%)
Type of credit (10%)
New credit accounts and recent credit inquiries (10%)
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