How Healthy is Your Credit Score?Apr 08, 2018
How healthy is your credit score? It may seem like a strange question to ask, but knowing where you stand can help maintain your overall financial health while avoiding any nasty surprises. Checking up on your credit score can also help you detect any fraudulent activity that may point to identity theft.
But wait, what is a credit score anyway?
It’s important to understand what your credit score is and how it is calculated. Once you borrow money or apply for credit, a personal credit report is created for you. This report keeps track of things like the types of debt you have, how much you owe, and any missed or late payments in the past few years. Your credit score is based on this information, as well as a few other factors. In Canada, credit scores can range from 300to 900, although you won’t find too many people at either extreme.
How healthy are my credit report and credit score?
It seems silly, but you can’t access your credit report and credit score at the same time. You can receive a free credit report in the mail, although this will not include your credit score. (These reports are also available online, but you would have to pay for access.) Both Equifax and TransUnion, the two major credit bureaus in Canada, also charge separately for access to your credit score. For more information, check out this helpful CBC article.
Once you have a copy of both your credit score and credit report, it’s time to determine how you financially healthy you are. Typically, a score of 680 or higher is required to get the best interest rate. If your score is below 650, you may have trouble getting access to credit.
It’s also important to check up on your credit report. Look carefully for any inconsistencies, such as accounts that you never opened or late payments that you actually paid on time. Some inconsistencies could indicate that there is a mistake in your credit report, which you’ll want to correct with the credit bureau. When a lot of things don’t add up on your credit report, you may be a victim of identity theft or fraud.
How can I boost my credit score?
If your credit score isn’t as high as you hoped, or your credit report has some question marks on it, it’s time to take action. Inconsistencies in your credit report can be fixed by disputing the errors with the credit bureau.
Your credit score, however, may take a little more effort to rebuild. Making consistent debt repayments is a good place to start. Limiting the amount of credit you use and diversifying the types of credit you use can also help. For more great tips on how to rebuild your credit, check out personal finance blogger Stephen Weyman’s article 12 Easy Ways to Increase Your Credit Score.