Understanding your Credit Score and Its Importance

By John Hayden

If you received a loan or a credit card, you have a credit score. And understanding your credit score is vital to your everyday life. Some companies take your credit report and give them to people who might be considering loaning you money. The report is simply a show of your ability to pay back.

Therefore, owning a credit card means having a credit score on a file. Credit scores impact our lives in ways a lot of people don’t know. A research in 2016 into the average number of credit cards per Canadian adult discovered each adult possessed an average of 2.2 cards.

How your credit score is calculated

Your credit report displays your credit score. It contains your financial history and assigns a numeric value using different factors, which include credit utilization, payment history, credit history, public records, and inquiries.

On your first loan, credit scores begin around 300 and are continuously updated per month. 900 is the highest score, which is credit perfection, but 600-700 is where most people fall into, which is good. With this, let’s see how credit scores affect us daily. Yes, they do!! But most people don’t know.

Why understanding your credit score is important

Easy loan approval

Equifax, a credit bureau, let us know that any score above 660 is smooth sailing when applying for a loan while below it will create hiccups.

Knowledge of your credit score means no unpleasant surprises when applying for credit cards, mortgages, or car loans, etc. You’ll know what can be approved and your interest rates.

Also, 10% of your credit score goes for inquiries that happen every time you apply for a loan. You don’t want this frequently if you want a good credit score. Knowing your credit score will make you selective about loan products you choose because you will see if you will get approval or not.

Employers check credit scores

These days, employers no longer look at your resume and cover letter anymore; they also go through your credit score as a factor in their decision. It doesn’t sound right.

The truth is your credit score shows your financial history and, in a way, shows how responsible you are. Reports have shown that over 60% of employers use credit scores as the final factor for hiring employees. Here, a poor credit score can make you lose your dream job.

Your credit score is unbiased and can’t be tampered with by you, so keeping it as excellent as possible should be your goal.

Landlords check it too

In places like Canada where housing is gold, applicants need every advantage they can get, and your credit score has evolved to be one of the significant factors landlords use to decide who they rent their properties to. Don’t sleep under the bridge because you have a poor credit score.

These days, rental companies and landlords ask to see your credit score before letting you take over the property. You can’t decline this inquiry as competition is stiff, and you’ll be sidelined. Poor credit history will make you look irresponsible, so strive to keep it as impressive as possible.

Check your credit score for free

There are lots of online sites that help you check your credit score. And the best thing about most is that they are free and easy to use. Do your research till you find one that’s easy for you. With this, you get tips on how improve your score, track your score and get updates.

Understanding your credit score will keep you financially healthy and make you access and enjoy your life more. Work to raise your score and keep it looking impressive. Use both short and long term approaches to do this. Go online, get a mentor, be more financially knowledgeable and responsible.

With over 500 satisfied clients, we can help look into your credit score whenever you want to buy a car from us and give you tips on how to improve it. we also help to make sure it’s as impressive as it can be.