A credit score is a numerical representation of what is contained within a person’s credit records. This will indicate how creditworthy a person is when it comes to whether a moneylender will risk loaning them money. The information will generally be sourced from credit bureaus.
To check credit score canada is to know where you stand in financial terms.
Let us then consider just how important our credit score is when living in Canada and looking to borrow money.
How Important is a Credit Score in Canada?
In Canada, credit scores are a vital financial tool and something that will greatly impact a person’s life. This is because they can affect someone’s ability to obtain a loan or mortgage.
Credit scores are used, not only to decide whether to give someone a mortgage but also what rate of interest is to be charged. Someone more at risk of defaulting on their payments may find themselves paying more overall. A part of this is because there will be less choice of financial institutions willing to lend them money.
What Credit Score is Considered a Good Score in Canada?
In Canada, credit scores are rated as follows:
720 and 799 – very good.
650 and 719 – good.
600 and 649 – fair.
Under 600 – poor.
You can see then where you need to be if wishing to borrow money at a competitive rate. A fair rating will create uncertainty for many providers. Where a credit rating is poor, you will severely limit your options and risk a very high-interest rate. in exchange for the privilege of borrowing money.
It is useful to know where you stand financially when in Canada, and these scores will give you an indication as to how you will be viewed by financial institutions. Anybody looking to build up a good credit score, to obtain a mortgage, should look to build up their credit score by being seen to pay back a smaller loan on time. This might simply be paying your credit card bills on time.
If looking to buy a home in Canada you will benefit from a good credit score. This will give you a choice of where to borrow from. Funding a mortgage is a life-long commitment and you will want the best possible rate. A good mortgage rate is also obtainable by putting down a sizeable deposit.
It is not cost-effective to rent a property for long because you are never going to own the property but are still paying large sums in exchange for living there. Also, there is a certain status to being a homeowner. A house is a symbol that you have made it in life financially. It also gives peace of mind to have put a roof over the head of your children that you have control over. Renting is unsettling as it is a less than permanent arrangement.
Whether you are looking for a loan or to buy a house in Canada, you will find that your credit score is important. This is to do with acceptance and receiving the best possible mortgage rate. Your credit score may affect how much money you will need to find each month to pay your mortgage. Providers will put up their rates when it comes to riskier propositions. Everyone will want to avoid loaning money to those who are less likely to pay based on their credit history. Those institutions deciding to take the risk will understandably charge extra for the risk they are taking.
Consider the figures above and check out where you currently fall on the scale of credit scores. It will impact your financial future when it comes to borrowing. A solution to improving your credit score is to obtain a credit card and start showing that you are creditworthy. Always pay the balance of your credit card statement on time because it might matter one day. It can affect your financial future, along with other payments you miss or are late settling.