Have you ever checked your credit reports or credit scores? Yes, there is a difference between the two. If you haven't in a long time - or ever - it's a good idea to monitor your credit, especially if you are planning on borrowing money soon.
Monitoring your credit with regularity is a healthy exercise. You should definitely be doing it if you have financial issues or if you might need a loan in the near future. After all, your credit reports and credit scores determine whether or not you get approved for credit cards, mortgages, lines of credit and loans.
Credit Reports and Credit Scores
It seems counterintuitive, but your credit reports and credit scores are two separate entities, despite the fact that they go hand in hand with each other. Your credit report is a file of information about all of your credit accounts. Your credit score is a three digit number that represents your creditworthiness.
Where is all of this information coming from? Mainly from the two national credit reporting agencies - TransUnion Canada and Equifax Canada. They collect credit-related information from lenders, creditors and whomever else you are involved in credit transactions with.
They compile this information into reports, which list balances, limits, payment history, types of credit accounts, how much of your available credit you are utilizing and more. They have also developed formulas to calculate your credit rating, which is based on the information in your reports.
How to Monitor Your Credit
Good news: You can access all of the important information in your credit reports for free. Unfortunately, it will cost you to acquire your scores.
Each year, you are entitled to one complimentary copy of your credit report from both of the national credit bureaus. To request yours, all you need to do is visit their websites, print out the request forms to fill out, and mail or fax them in. You can also request them by phone or by visiting the agency in person if you live nearby. If you want instant access to your report online, you will need to pay a fee.
As for your credit scores, you can't get those for free in Canada. You'll have to subscribe to a paid service from either TransUnion or Equifax to see your rating.
It's a good idea to know your score if you plan on borrowing money, so you know exactly where you stand. There are free tools out there that can give you a rough estimate of what your score is, but if you want it straight from the horse's mouth, you'll need to pay for it.
Is My Credit Score Good?
Both Equifax and TransUnion use scoring scales that range from 300 to 900. The higher your score, the less of a risk you are in the eyes of lenders and creditors. The main factors that go into calculating it are your: payment history, outstanding debt, length and history of credit accounts, the diversity of your credit portfolio and recent activity.
If you've recently begun monitoring your credit and want to know if your score is good or not, here is a rough breakdown from Equifax:
- Poor: 300 - 559
- Fair: 560 - 659
- Good: 660 - 724
- Very good: 725 - 759
- Excellent: 760 - 900
A poor credit rating can really hold you back when you need to get a loan or buy a house. If your score is below 650, you might have a difficult time trying to get approved. If you need a car, Canada Auto Loan can help you with your problem.
When You Need a Car with Less Than Perfect Credit
There is a way to get an auto loan if your credit is bruised. It's called a subprime car loan, and the team here at Canada Auto Loan are experts on the subject. We can help you locate a car dealer in your local area that is equipped to handle your financial situation and can get you approved.
You'll be able to get a vehicle that fits your budget, and the timely payments you make on the loan will help boost your credit score. Get started today by filling out our completely safe and obligation-free online application.