Resources
Understanding Your Credit Score
A credit score is an assessment determined by a credit reporting agency based on our repayment habits. It is essentially a tool used to determine the level of risk we represent to lenders (compared to other consumers). It's quite simple: the more consistently we pay our debts on time, the better our credit score will be. In Canada, the main credit reporting agencies are Equifax and TransUnion.
Is my credit score important?
Yes, it is very important. A good credit score indicates a strong financial reputation. With a good credit rating, lending institutions will have greater confidence in your ability to repay a loan. This increases your chances of obtaining a loan, which is beneficial when you need to borrow significant amounts, for example, to purchase a car or a home.
On the other hand, it is much more difficult to find a lender willing to grant you a loan if you have a poor credit score. This can also be detrimental in other situations, such as when trying to rent an apartment.
Who can access my credit file?
- A financial institution, before granting you a loan
- A business, before selling you an item on credit
- A landlord, before renting an apartment to you
- An employer, before hiring you
- You, to verify the information contained in the report
What information is accessible in my credit file?
- Your name, address, and date of birth
- Employment history (employer's name, job title, length of employment, income)
- Your credit status: late payments, defaults, debt repayment history, available credit
- Information on your public financial records (unpaid taxes, bankruptcies, judgments against you)
- A list of organizations or individuals who have requested information regarding your credit
How long is this information kept on my credit file?
For 6 to 7 years
North American Credit Score Standards
R1 and R9 Credit Ratings
The most common credit ratings are "R" ratings. These are known as North American standard account ratings and are the most widely used. The "R" refers to "revolving credit," indicating that the rating applies to revolving credit products such as credit cards.
The best rating you can be assigned is R1. Conversely, the worst rating is R9. Other rating indicators may appear on your file, such as the "I" rating for installment loans, like car loans, or the "O" rating which refers to an open line of credit.
Credit Score
Equifax and TransUnion credit reporting agencies use a scale from 300 to 900. On this scale, higher scores are better. The higher your score, the lower the risk for the lender.
You can obtain your credit report for free from Equifax or TransUnion.
Still have questions about how your debt affects your credit score? Please do not hesitate to contact Serpone Group. Our team will answer all your questions and propose creative solutions to help you regain your financial balance.
