Your credit history is based on information sent to the two major credit reporting agencies in Canada Equifax and TransUnion from companies who have extended credit to you.
Your credit score is used by lenders to help them establish whether or not you’re a credit risk and to mitigate losses due to bad debt. The credit reporting agencies use a statistical formula that translates your information into a 3 digit score between 300 and 900. Higher scores are considered better scores. The higher the score, the more favourably lenders look upon you as a credit risk.
Each lender has different criteria which are considered in determining whether they will lend you money. Some lenders require a minimum credit score to extend credit and other lenders link your mortgage rate to your credit score depending on their perceived risk.
The credit scoring model is always changing. Our mortgage professionals stay on top of emerging trends on the credit scoring scene so that we can continue to provide correct advice and the best possible service to our clients.
Factors that can impact your credit score include:
Your credit report contains information about your past and present personal and financial situation.
It’s important to begin building a credit history as early as possible. You can begin to build one by applying for — and responsibly using — a credit card. Your financial institution or mortgage professional can help.
Demonstrating your ability to manage credit is key to maintaining a good credit score. There are a number of things you can do to improve your credit score. These include:
Once your credit score has improved, work with your mortgage professional to obtain a mortgage that works for you.
To find out more about credit scores and reports, visit the Financial Consumer Agency of Canada or click here to download Understanding Your Credit Report and Credit Score. This guide provides practical, straightforward information on how to obtain and understand your credit report and score, as well as how to build and maintain a good credit history.