Let’s talk credit scores!

We recently debunked some myths around whether a credit check is bad for your score and we discussed the benefits of a good credit score for loan approvalWe discovered that checking your score will not lower it and we realized how important your score is for loan approval. So let’s discover what your credit score says about you and your spending habits. 

What is a credit score?

credit score is a unique three-digit number that reveals a lot more about you than you think. In Canada, credit scores range from 300 up to 900 points, which is the best score. According to TransUnion, 650 is the magic middle number. If you have a score above 650 this will probably qualify you for a standard loan, while a score under 650 will likely make it difficult for you to get new credit. But what does your score mean?  

Generally, your credit score is a tell-tale sign of how well you manage your money. Your score let’s potential creditors know how much of a risk you are and if there’s a chance you won‘t pay back your loan or credit card. Following this, many people believe that the higher the bank balance, the higher the score. Whereas having a good income may be extremely beneficial, it doesn’t exactly showcase how good you are at saving, paying bills or budgeting.

A good credit score but bad with money?

There are times that your credit score may be good, but your money management skills are poor. For example, you may make your minimum payments on time but maybe you’re not paying as much as you can afford. This technique may result in a good score, but it doesn’t lighten your debt load quickly. On the other hand, we see that sometimes many people try to increase their credit score, by opening new credit accounts. This may seem like a good idea, but life happens! At times, having these extra credit accounts may be too much of a temptation for someone who is bad at managing money, and can result in more debt.  

So, with all these aspects considered, your credit score is still essential to creditors. You may have a good score but bad money management skills, or the opposite. Regardless of what your score reflects, the main thing that matters is how your future lenders view you and if you’re a risk they’re willing to take on. The main factor for creditors to consider, for any financial product, is your credit score. This score is made up of your payment history, your personal debt, your credit history and your credit inquiries. Let’s see what each credit score range is, and what it reveals about you.  

 0 to 300 (no credit history)

So, if you’re score is zero, don’t worry – this generally indicates you have no credit history. This applies to people who have just opened their first bank account, or someone who is new to Canada. It’s important to touch base with your bank in order to find out what you can do to begin building credit.  

Unfortunately, if you are not new to Canada or new to banking and your score is below 300, you’re considered an extremely high-risk for creditors and will not be approved for any product.  

300 to 629 (Poor)

Unfortunately, if you fall into this range, you have extremely poor credit history. It may be a case you have missed a few loan payments, are nearly at your credit limit or in a consumer proposal or bankruptcy. 

If your score is in this range, you will find it difficult to obtain any credit product from your bank. But don’t worry, there’s always ways to improve your score. The first step would be to contact a professional who can help advise you on what areas to focus on to improve your score. Our Score-Up credit rebuilding product can help makes a positive impact on your credit score so you can plan for a positive financial future. Find out how it works here. 

630 to 689 (Fair) 

Where your score is not awful if you fall into this range, it will make your financial products a lot more expensive in comparison to someone with an excellent score. For example, a borrower will face high interest rates in this category compared to someone with a pristine score. This score also makes borrowers ineligible for some of the perks that come with credit cards, such as cash back and rewards.  

690 to 719 (Good)  

If you’re in this category, congratulations. It’s not easy maintaining a high score so you must have worked hard in tracking your spending and paying most of your bills on time. Borrowers who have an excellent score are unlikely to have trouble obtaining financial products and usually get favourable interest rates.  

So what does this credit score say about you? You’re financially responsible and with the right coaching, you have the potential to Score-Up to an excellent credit score. Learn how you can go that extra-mile and increase your score even further with here 

 720 to 900 (Excellent)  

This is the prime category to be in. You’re a perfect contender for any financial product due to your lack (or no) late payments on your credit report. You regularly pay off your balances in full. You also will have a low credit utilization across all their lines of credit. Most Canadians with excellent credit enjoy rapid approval for their credit card and loan applications. As well, they receive the lowest interest rates available, high credit and loan limits, and access to great premium credit card rewards and perks. The financial world is open for business to anyone with an excellent score, and it’s definitely something to be proud of.  

 

About Marble Financial Inc. (CSE: MRBL; OTCQB: MRBLF) We are a group of forward-thinking financial technology experts that fully understand the benefits and drawbacks of credit in Canada. Marble helps Canadians rebuild their credit to gain access to prime lending. Through our industry-leading proprietary technology solutions Fast- Track, Score-Up, and Credit-Meds. Our proven strategy guides our customers back to a meaningful credit score, 50% quicker than traditional methods. Since 2016, Marble is proud to have empowered thousands of Canadians to a positive financial future. We continue to establish ourselves as leaders in financial wellness.