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Credit Score

780.909.3659



The credit score is also referred to as a FICO Score. It is a mathematical formula created by Fair Isaac and Company.

The credit score is used by most companies to see if you are a good credit risk or not. Equifax and Trans Union will crunch the numbers from a credit report and spit out a number between 300 and 900, or possibly an R for Reject. A credit score of over 680 is considered excellent. 

Calculating Credit Score

 FACTOR

WEIGHT

POINTS

Payment History

Bankruptcies, late payments, past due accounts and wage attachments collections, judgments

35%

315

Amounts Owed

Amount owed on accounts, proportion of balance to total credit limit

30%

270

Length of Credit History

Time since accounts opened, time since account activity

15%

135

New Credit

Number of recent inquiries, number of recently opened accounts

10%

90

Types of Credit

Number of various types of accounts (credit cards, retail cards, mortgage, line of credit, loans, etc.)

10%

90

POTENTIAL TOTAL

100%

900

How to Improve Your Credit Score

  1. Order a copy of your credit report annually. Review it carefully and correct any significant errors. Credit reports can be ordered from:
    1. www.equifax.ca
    2. www.transunion.ca
  2. Pay your bills on time.
  3. If you have a questionable credit history, you should open a few new accounts. Use them responsibly and pay them off on time in order to build your credit.
  4. Don't open accounts and then not use them. Having 6 or 7 of the same type of credit card does not work in your favour.
  5. Having a credit card or instalment loan can help boost your score as long as you don't have a high balance.
  6. Keep balances low in relation to the available credit. If the credit limit is $10,000, keeping the balance below $2,500 (or 25% of the limit) will improve your score. Balances over 75% of the limit will decrease your score. Going over the limit will have an eve greater negative effect.
  7. Pay off credit card debt instead of moving it around to lower interest cards. Moving balances to other credit cards and closing out old accounts can hurt the score. 

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