How to understand your credit score?

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How to understand your credit score?

A credit score is a three-digit number based on the information in your credit report. Credit bureaus don’t release the exact math behind this number, but what we do know is that your credit score increases when you can demonstrate that you use credit responsibly (paying bills on time) and that your credit score decreases when you show that you have difficulty managing credit (a bill is paid late or goes to collections).

Your credit score, also known as a FICO score, is used to tell a lender the likelihood that you’ll be able to pay back the money they’re lending.

It’s up to each lender to decide the lowest credit score they feel comfortable with and will likely use this score to set an interest rate and a credit limit. The higher the score, the lower the interest rate, because, generally speaking, the risk for the lender is lower.

In Canada, credit scores range from 300 to 900, with the best being 900. Credit scores change every time your credit report is updated.




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