The Significance of a Good Credit Score As a Newcomer to Canada

You will quickly learn as a new immigrant to Canada how crucial establishing a strong credit score is. Your credit score is typically used by financial institutions and other organizations to decide whether or how much money to give you.

Determining Credit Scores

Your credit history affects your credit score. Your credit history is created each time you apply for or are granted credit, as well as each time you make or miss a payment and use your credit.

There are three ways your financial institution will assess your credit history when you ask for credit:

• Analysing your previous records;
• Consider any new information you provide in your credit application;
• Contact a third-party credit agency for a report on your overall credit history.

Companies that provide credit to you provide the credit companies with information. Various financial institutions build up your credit report, which briefly explains your financial activities.

To better understand your rating and make sure the data is accurate, it is recommended that you periodically obtain your credit report’s details from the credit bureaus. This is crucial since a good credit history improves your chances of obtaining credit in the future, but a bad credit history may make it more challenging for you to borrow money or obtain credit in the future.

In Canada, your credit score from another country won’t typically be taken into account. In Canada, Equifax and TransUnion collect the data that generate your credit score.

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Credit Scores: What is a Good One?

According to Equifax, a decent credit score in Canada typically ranges from 660 to 724. It is good if it is between 725 and 759. If it is 760 or higher, it is regarded as outstanding. The better your credit rating, the higher your score. The likelihood that you will be granted credit and loans increases with your credit score. But as every person’s financial position is unique, your credit score will fluctuate over time depending on your credit history and level of debt.

How Do These Companies Determine My Credit Score?

According to Equifax and the Government of Canada, credit scores are based on the following information:

• How consistent you have been in paying off the money you have borrowed?
• The amount of credit that a bank or credit card company has given you versus how much you have used up;
• The length of your credit history;
• You should also avoid applying for too many loans, having too many credit cards, and requesting too many credit checks in a short timeframe.

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