Credit Score. How to protect it and how is it calculated?
- Kiki Berg, Senior Mortgage Planner
- Jan 9, 2015
- 2 min read
Updated: Jan 3, 2021
Credit reporting companies calculate your score based on your payment history, how much you owe, how long you’ve had credit and how often you apply for new credit. Your credit score is a three-digit number that lenders use to predict your creditworthiness. It runs from as low as 300 - 900. Average score is above 680.
In general, the higher your score, the less likely you are to become delinquent on credit. If it’s above 650, you’ll probably qualify for a standard loan. If it’s lower, you may have trouble getting new credit.
Because your credit score and credit report are constantly changing, it’s important to review them on a regular basis, at least once a year. Since there are two main credit reporting companies in Canada—Equifax and TransUnion—it’s a good idea to check your records with both companies. This helps you identify and correct any inaccurate information, detect any fraudulent activity and gauge your overall credit health.
If you’re planning on applying for a mortgage, it’s especially important to check your report a 6-12 months in advance. If your credit score is a little low, here are some actions you can take to improve it:
Pay all your bills on time. Paying late or going into collection can reduce your score.
Don’t max out your credit limits. Keeping balances below 65-75% of your limit can increase your score.
Don’t apply for credit you don’t need. Too many inquires over a short period can reduce your score.
Don’t close old credit accounts, even if they’re inactive. This can make your credit history appear shorter which can reduce your score. History is 35% of your score!
Correct any negative inaccuracies on your credit report. This can increase your score.
Cell Phone bill report to the credit bureau - pay them on-time.
Credit cards report monthly (end of the monthly)
Divorce or Separation:
If your going through a separation or divorce - ensure you KEEP making those mortgage payments.
Know which cards you are joint with. Sometimes we get added as a secondary card holder not thinking it might go on your credit score.
Still wondering what your credit score is and how to improve it? As an added value to our subscribers, receive a Free Credit Report and Credit Booster Consultation (Value of $97). Call us now at 778-808-7756.
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