IMPORTANCE OF CREDIT SCORING IN CANADA
Why is credit scoring important?
First of all, we must remember that the credit score is one of the factors taken into account when making a loan, whether it is for a house, car, furniture, business, etc.
Therefore, if at some point we have the dream of residing in this country, buying a house or maybe opening a business is part of it. Do not forget that more important than having a credit score is to keep it in good health.
How to keep a credit score in good health?
- It is imperative to make the minimum credit card payments on time. Sometimes people think 'it's just this one time and it won't make a difference' but when it comes to late credit card payments, it does. For every late payment, the financial institution will send an alert or red flag to Equifax and TransUnion (the institutions that evaluate your credit score in Canada). For example: if the due date is December 10th, and we make the minimum payment on December 11th, that is enough for the system to send the alert.
- Do not use more than 70% of our credit limit.
- Limit your number of credit applications or credit checks. Each time you apply for one you get 3 points taken off.
- Increase the length of your credit history. The longer you have a credit account open and in use, the better it is for your score. Your credit score may be lower if you have credit accounts that are relatively new. Consider keeping an old account open even if you don't need it. Use it from time to time to keep it active. Make sure there is no charge if the account is open but you don't use it. Check your credit agreement to find out if there are any fees.
So you can measure your credit score in Canada generally, a very good credit score (725 to 759 points), good (660 to 724), fair (560 to 659). If there are too many credit checks on your credit report, lenders may think that you:
- Urgently seeking credit
- Trying to live beyond your means
If you still do not know how to start your path to migrate to Canada we invite you to have an immigration consultation which you can schedule in the following link.
If you are coming soon to Canada and want to open your bank account, we can help you in the following link.