Tips For A Better Credit Score
Struggling to Understand Your Credit Score?
Have you ever wondered how your credit score is compiled? Your score is out of 900 – 0 being the lowest and 900 the highest or best credit. Any score over 680 is considered to be “A” credit. No one will ever have a score of 900 because as soon as you use your credit your score lowers.
The largest % of your score is made up of repayment history. Pay your minimum balance on time rather than your full balance 5 days late. The second largest % of your score is based on your balance versus your limits. Keeping your balances under 70% of your available limit will help keep your score in good standing. The third largest % of your score is based on your ability to manage different credit accounts. Lenders look for a minimum of 3 different credit accounts on your bureau. Showing different credit accounts in good standing will show lenders how responsible you are with you credit. A small % of your score is based on the average age of your account. Avoid closing out old accounts and opening up a number of new accounts as this will lower the average age of your accounts. The remaining % of your score is the amount of inquiries on your credit. Applying for a number of different types of credit gives the perception that you are a credit seeker. Try to keep your inquiries under 6 per year. (The exception to this is if you are shopping for a truck, etc. if you “hit” your bureau several times within a 24 hour period it will count as one hit.)
Remember: Your score will lower much quicker than it will increase. Equifax and Trans Union are automated scoring systems so if you know the facts you are empowered with obtaining and maintaining a strong credit score,
It is recommended that as a consumer, you verify your Credit Report annually to ensure that there is no fraudulent activity occurring in your name. Please visit www.equifax.ca or www.transunion.ca
*Additionally, many insurance companies now offer a credit protection program on your homeowners or rental insurance policy