Written by Kelley Keehn
Wednesday, November 14th, 2018
If you're like one of the 41% of Canadians surveyed who said that money stresses them out more than anything, you're far from alone.
That stress could also apply to your credit score. Do you know yours? This three-digit number controls more of your life than you may realize. Here's how you can find out what yours is and how to improve it or keep it healthy.
According to Laurie Campbell, CEO of Credit Canada Debt Solutions, "having a good credit score doesn't just help you get a line of credit, car loan, bank loan or mortgage, but it can also help you get better, more competitive insurance rates, better interest rates on any loans you qualify for, a cell phone contract, a job offer or a rental apartment. Potential employers can look into your credit report, as well as potential landlords."
What's Considered a "Good" Credit Score?
In Canada, credit scores range from 300 to 900. The higher the score, the more likely an individual is to pay their bills on time. Julie Kuzmic, Director, Consumer Advocacy for Equifax Canada Co., says: "Typically a score around 760 or higher is considered to be excellent. Lenders would likely consider an individual at 830 to have the same risk profile as an individual at 790. Generally speaking, someone with a score in this range does not need to be concerned about trying to increase their score."
How Do You Check Your Score?
Head to Equifax.ca or Transunion.ca. These are the two main reporting agencies in Canada. You can request in writing (or in person in some cities) a free report. However, that won't tell you your score. For that, you'll need to head online and pay for it. Check with your bank or credit card company – some have limited-time promotions offering the ability to learn your score for free. Just be sure to read their privacy statement in return for their service. Note: checking your score won't hurt it!
Keep Calm and Go Slow to Build or Rebuild
Your credit score is fluid. For better or worse, each month your good or late payments and other factors affect your score. But with dedication and attention, you can increase your score and keep it high.
Both Julie and Laurie warn that there are no quick fixes.
If you're just getting started, a good first step in establishing a solid credit history is to get a credit card in your name and use it occasionally, being sure to make the payments on time. "Even as little as six months of good payment behaviour can go a long way to developing a good credit score," says Julie.
Tips for Improving Your Score:
Tip #1. Pay all your bills on time. That includes rent, mortgage payments, utilities, credit cards, taxes, and more. And a minimum payment made on time is better than paying off the balance in full, but late.
Tip #2. Review your credit report at least once a year. If it contains incorrect information, contact Equifax or TransUnion directly and notify them immediately. Incorrect information on your credit report could be an indication of identity theft or fraud.
Tip #3. If you've missed payments, get current and stay current. Even making minimum payments is better than no payments.
Tip #4. Don't apply for too much new credit in a short amount of time. Only apply for new credit and open new accounts as needed. And don't apply for department store cards – they generally affect your score adversely. Plus they carry a whopping interest rate.
Tip #5. Sometimes things end up in collections, like a cable bill or old phone plan you thought you closed out, but a few dollars still remained. Regardless of the amount, having anything in collections will hurt your score. Your report can show if this has happened to you. Remedy it by paying off the existing amount to remove it from collections.
Need more help? You can get a free session with a non-profit credit counsellor and they can pull your report and score at no cost to you.
The bottom line is that making payments on time is what lenders want to see and that behaviour over time will have a positive effect on a credit score. And check out the tools and resources available for this year's Credit Education Week – November 13th to 16th. You'll find everything you need to get your score strong and how to keep it that way!