Your credit score is undoubtedly the most important part of your financial profile. It is widely used to determine some financial factors in your life, such as leasing a vehicle or qualifying for a mortgage. On the business side of things, your business credit score determines whether or not you’re creditworthiness enough to qualify for a loan. Since all Canadians carry some form of debt, having and maintaining a good credit score should be a part of your current and future financial plans.
Let’s take a closer look at what makes a good credit score, and how to access your credit scores for free!
What Is a Good Credit Score?
Personal and business credit scores ratings differ greatly. At the same time, each credit reporting agency (Equifax and TransUnion) calculates your score differently. When it comes to your personal score, a good credit score starts at 650 and goes up to 900. The higher your score is to 900, the more trustworthy you look to lenders, banks, and employers.
Here’s a quick breakdown of personal credit scores:
- 800 to 900: Excellent credit!
- 720 to 799: Very good credit
- 650 to 719: This is considered good or acceptable to lenders.
- 600 to 650: This is fair credit.
- 300 to 599: Bad credit. You need to work on building it. Check out these tips on how to build and establish credit in Canada.
Business credit score ratings are different. They’re based on and separated by a number of factors. For instance, there is a Business Delinquency Score, that allows you to determine the potential delinquency of your business within 12 months. The Business Failure Risk Score, on the other hand, allows you to determine the potential risk of your business within 12 months. And Payment Index measures your business’ payment habits. That’s why it is recommended to get your business credit report from all credit agencies and monitor them regularly.
How Do I Find Out What My Credit Scores Are?
There are several ways you can receive a free copy of your credit scores. The traditional way is, of course, by mail. There are two major credit bureaus in Canada: Equifax and TransUnion Canada. You can email them and order your credit reports. It is highly recommended that you check your score with both agencies.
Besides mail, you also have the option of getting your credit score online. You can create an account with Loop and access your free Equifax credit scores right away!
Let’s take a closer look at the 5 steps you need to take to safely access your credit score.
Choose a credit reporting agency
You can get your credit report at no cost once a year under Canadian law. Now, when it comes to choosing, you should go with both. Most people don’t realize that your credit score has a few changes from one credit bureau to the next. This is because all financial institutions use a different model to determine your credit score. A good rule of thumb is to receive each score every 6 months, from both agencies. This will get you in the habit of spending responsibly and fully understand the extent of your financial health.
Determine how you would like to receive your report
There are three ways you can receive your report: By mail, in person, or online.
By mail: First, download Equifax’ Canadian Credit Report form. Fill out the form with all of your contact information. Then, photocopy two pieces of government-issued identifications. Put your IDs with the completed form in a sealed envelope and either send it by mail or fax to the provided address. It will take about 5 to 10 business days to receive your credit report.
In-person: You can receive it on the spot! Both credit bureaus are all over Canada, except for Manitoba.
Online: Good news! While most agencies charge a fee to process your credit report online, Loop will give you your credit report and score for free. Get started today!
Monitor your credit score regularly
If you’re concerned about fraud or identity theft, it’s a good idea to check your credit score on a regular basis. Credit monitoring will let you know if you’ve been a victim of fraud but it won’t actually stop it from happening. That’s where you need to take appropriate steps. Your free report twice a year should provide you with enough information, but it’s wise to sign up with Loop free credit monitoring and keep consistent tabs on your financial health.
Ultimately, it’s good to know the ins and outs of credit reports and credit scores. The credit bureaus are always updating your credit file with new information, and with it, your credit score changes. So look into the two major Canadian credit agencies, familiarize yourself more with different scores and ratings, and continuously work towards building and maintaining both your personal and business credit scores.
