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You Need to Check your Credit Report Often. Here's Why.

You Need to Check your Credit Report Often. Here's Why.

Our Copetown car loans team are going to touch on the primary reasons why you should check your credit report often.

 

Everyone in Canada will need credit at some point, so developing this habit of checking your credit will help make your life easier.

Credit permeates all aspects of life in Canada

 

When people say “credit,” the first thing that comes to mind is a credit card, but that is just one financial tool available to consumers.

 

Credit cards are classified as revolving credit, and how it impacts your credit score is different from, say, an instalment loan.

 

Credit score, credit card, loans, all of this financial jargon may sound complex, but they are all found inside your credit report.

What is a credit report?

 

A credit report contains all of your financial interactions with creditors.

 

Equifax credit report

 

This could be your cell phone provider, utility provider, car loan, credit cards, lines of credit, etc any company that gives you credit will usually report your interactions with them to either TransUnion or Equifax.

 

The report will note how much you owe each creditor compared to the total amount of credit you have available.

 

This “credit utilization rate” goes into the calculation of your credit score, generally speaking, if your credit utilization rate is lower than 40%, it will have a positive impact on your credit score.

 

Credit Utilization Rate. Source: Experian

 

Credit scores can range from 300-900 depending on which scoring model is being used; you should not fixate on having a perfect credit score.

 

In Canada, if your credit score is over 720, you are considered to have great credit and will be able to access the most favourable terms. To learn more about building credit score, click here.

Why having a good credit score is important

  • If you are thinking about buying a home and need a mortgage, the only way you can get approved is to have a credit score of 600 or higher to secure Canada Mortgage and Housing Corporation (CMHC) default insurance. Without this insurance, you cannot get a mortgage without a 20% down payment.
  • When trying to rent an apartment, especially in places like the GTA, even if you can afford the rent, prospective landlords will pay extra close attention to your credit score. If your score is lower than other renters applying for the unit, your application will be rejected.
  • Certain jobs require good credit; examples would be working with money in a bank or if you are a high-level member of law enforcement.
  • Peace of mind knowing that if/when you need access to financing, your good credit will open doors for you.

 

2021 car loan rates in relation to credit score. Source: CarFinder

 

Having a good credit score will also help when it comes time to buy a car. Interest rates on car loans are quite high, so you need a good credit score if you want to secure a decent deal (we'll get you approved no matter what your credit score, click here to get started online.

 

To get the best possible financing, work with a local car dealership; they will go above and beyond to make sure you have a great car-buying experience.

 

We’d love to help you find an affordable car loan. Simply fill in the form below and we’ll get back to you ASAP or see our selection of used cars at our Burlington dealership. 

 

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