What is a credit score?

Your credit score is designed to be a snapshot of your credit profile at any given time. It is a 3 digit number that that’s ranked on a scale from 300-900. Your credit ratings can range from poor to excellent or very poor to excellent.

It is used to help predict the consumer’s financial health and if they can maintain it with additional monthly payment. Credit bureaus use automated credit scoring to help with the approval of credit applications. The old method was manual and too time-consuming and labour intensive

Using modern credit scoring systems, credit bureaus are able to evaluate millions of consumer applications quickly and consistently based on several different characteristics.

Credit scores are unique to each credit bureau.

What is a credit score?

Your credit score is designed to be a snapshot of your credit profile at any given time. It is a 3 digit number that that’s ranked on a scale from 300-900. Your credit ratings can range from poor to excellent or very poor to excellent.

It is used to help predict the consumer’s financial health and if they can maintain it with additional monthly payment. Credit bureaus use automated credit scoring to help with the approval of credit applications. The old method was manual and too time-consuming and labour intensive

Using modern credit scoring systems, credit bureaus are able to evaluate millions of consumer applications quickly and consistently based on several different characteristics.

Credit scores are unique to each credit bureau.

How does credit work?

There’s no secret formula to credit scores, even though they often seem like a mystery. Firstly, your credit rating is based on your credit report. In other words, it tells your lenders and creditors a story of your borrowing habits and reputational risk. This then allows lenders and third parties to know if you’re a risk they’re willing to take on. They use this score to access and determine how risky it is to lend their monies.

Your credit score is used as a guide for any future lenders and it allows them to predict your financial health and if you’re able to potentially handle any more monthly payments.

How You Can Check Your Credit Score

Many people believe that if you check your credit report with the two major credit reporting agencies in Canada, then you will automatically see what your credit score is. But that’s not true. Likewise, your credit report and credit scores are separate, and you won’t see your credit score on your report. So that leads us to the question of how do you check your credit score in Canada?

Firstly, we feel it’s important to note that TransUnion & Equifax are the two credit bureaus used nationwide. Whereas they both provide you with access to your credit report, they may show you the same score. However, each credit score is derived from the information on your credit report. That is to say, there are many different types of credit scores used that vary depending on the lender and organization. So, in short, you don’t only have one credit score.

So how can you get your credit scores? Here are a few ways:
  • Check your credit card, financial institution or loan statement. Many credit card companies, banks and loan companies have started providing credit scores for their customers. It may be on your statement, or you can access it online by logging into your account.
  • Purchase credit scores directly from one of the two major credit bureaus or other providers.
  • Use a credit score service or free credit scoring site. Some sites provide a free credit score to users. Others may provide credit scores to credit monitoring customers paying a monthly subscription fee.

Why Is My Credit Score Different, Depending on Where I Check it?

Your credit score may vary depending on where you check it, because the algorithm each organization uses varies. It was found among many Canadian users, that their credit score was inconsistent across free credit score software and comparing to credit bureaus such as TransUnion & Equifax. So for example, your score may differ if you check on Borrowell vs Credit Karma. Generally, free credit check software’s purchase your credit score from these credit bureaus, but many users have reported their credit score has varied across them all. Your credit score is calculated using consumer data at that credit bureau, and an algorithm used to score this data.

Credit scores need credit data in order to provide you with a score. They need something upon which to base their calculations. Most credit scores use data compiled by one, or two national credit bureaus—TransUnion, and Equifax. A person’s credit report is a list of the data the bureau producing that report has compiled for that person. So, each reporting agency may have slightly different data and use a different scoring model, which could explain why our credit score differs.

Why Is My Credit Score Different, Depending on Where I Check it?

Your credit score may vary depending on where you check it

This is because the algorithm each organization uses varies. It was found among many Canadian users, that their credit score was inconsistent across free credit score software and comparing to credit bureaus such as TransUnion & Equifax. So for example, your score may differ if you check on Borrowell vs Credit Karma. Generally, free credit check software’s purchase your credit score from these credit bureaus, but many users have reported their credit score has varied across them all. Your credit score is calculated using consumer data at that credit bureau, and an algorithm used to score this data.

Credit scores need credit data in order to provide you with a score. They need something upon which to base their calculations. Most credit scores use data compiled by one, or two national credit bureaus—TransUnion, and Equifax. A person’s credit report is a list of the data the bureau producing that report has compiled for that person. So, each reporting agency may have slightly different data and use a different scoring model, which could explain why our credit score differs.

The Benefits Of Checking Your Score and Report

Consistency is the key to many good things in life like honing a new skill or learning a new language. Most importantly, being creditworthy at all times requires similar efforts on a consistent basis. We recently conducted a survey to discover that 60% of respondents were afraid to check their credit score. We understand it may be worrying to check your score and discover it’s not what you thought. But it’s important when looking to improve your score. Firstly, you must remember that your current credit score can be improved, no matter how poor it is. There are many benefits to checking your credit score.

Firstly, if you’re looking to boost your score, checking your score will help you see your progress. Secondly, you should always check your credit score before obtaining financial products. This will make sure you are prepared for the price of your interest rate. Similarly, if you check your score before obtaining a loan and it’s bad, you can improve your score before applying for a loan. Remember, every time you apply for a financial product like a credit card or loan, a hard credit pull inquiry will be performed. So, if you apply first and don’t like the loan offer, each time you apply again in the future will negatively impact your score. Above all, make sure before you apply for your loan, that you have a good credit score to get the best results.

To begin your journey to better credit, get started today with Score-Up!

SCORE-UP YOUR CREDIT