Credit Score - master the algorithym!
Have you often wondered how your credit score is calculated? Do you monitor it and think what made it go up or down?
When you are looking to secure financing, especially real estate financing you want to ensure you are putting your best foot forward. Here is what goes into your credit score!
In Canada, there are several factors that can affect your credit score rating, which is a numerical score ranging from 300 to 900 that represents your creditworthiness. The higher your credit score, the better your credit rating in Canada:
Payment history: Your payment history is the most important factor that affects your credit score. Paying your bills on time and in full can have a positive impact on your credit score, while late or missed payments can lower it.
Credit utilization: The amount of credit you use compared to the total credit available to you is known as credit utilization. Keeping your credit utilization low can have a positive impact on your credit score.
Length of credit history: The length of time you have been using credit can also impact your credit score. Generally, the longer your credit history, the better your credit score.
Types of credit: Having a mix of different types of credit, such as credit cards, car loans, and mortgages, can have a positive impact on your credit score.
Recent credit inquiries: Applying for credit or loans too frequently can negatively impact your credit score, as it may be seen as a sign of financial instability.
Public records: Bankruptcy, consumer proposals, and court judgments can have a negative impact on your credit score.
It's important to note that credit scoring models can vary between different credit bureaus, and lenders may use their own scoring systems as well. It's a good idea to monitor your credit report regularly and check your credit score to ensure that your credit rating is accurate and up-to-date.