1. Aging of Negative Items in Your Credit Report

Events such as bankruptcy, foreclosure, or late payments are examples of negative items that affect your credit score. These events remain on a credit file for a number of years. A late payment, for example, remains on a credit file for about seven years. As these events age and move into the distant past, hwoever, the affect they have on your credit score diminishes. As a result, as these items age, all other things being equal, your score can go up.

2. Changes in Revolving Credit Balances

Changes in revolving credit balances can cause credit scores to fluctuate. Credit card balances, for example, can change from month-to-month as you use your card, whether you’re paying off your balances in full or not. As your balances go up, your credit utilization goes up.

Credit utilization is calculated by dividing the amount of your debt on a credit card by your credit limit. For example, let’s assume you have one credit card with a $5,000 balance and a $10,000 credit limit. So $5,000 divided by $10,000 is 0.5, meaning you would have a credit utilization of 50%.

FICO looks at credit utilization both on an account-by-account basis and on an overall basis. The lower the utilization, the better. According to Tom Quinn of FICO, it’s best to aim for a credit utilization of no more than 20 to 30%.

One thing to keep in mind is that these revolving balances can change from month-to-month. Hence, your credit utilization also changes. If it goes up over a threshold that FICO finds significant, your score could drop. If it goes down and crosses a threshold that FICO finds important, your score could increase.

3. Age of Accounts in Your Credit History

As your credit file and accounts age, your score can improve. FICO looks not only at your oldest account, but also at the average age of your accounts. While this factor may not have a significant affect in any given month, it can cause scores to increase when accounts cross an age threshold that FICO finds significiant.

4. Changes in the FICO Formula

FICO changes its formula periodically. FICO is continually trying to improve its formula to make it a more accurate indicator of credit risk. The same is true for non-FICO credit scoring formulas. The result is the multiple versions of the FICO formula are in use at any one time. When a new version is applied to your credit file, it can result in changes to your score.

5. Applying for New Credit

Applying for new credit could lower your credit score. We don’t know if Lakisher applied for new credit. But if she did, this could explain some of the drop in her credit score. Generally, however, inquiries are not a significant factor in the FICO formula.

6. Scorecard Hopping

Another explanation to changes in a credit score is that you may have been placed in a new scorecard. Called, scorecard hopping, this occurs when FICO places a consumer in a new scorecard. FICO doesn’t simply lump every consumer into the same pot and evaluate us all equally. They put us in what they call different scorecards.

FICO provides very little information about its scorecards. One scorecard that most believe exists, however, is for those who have a bankruptcy on their record. Scorecards enable FICO to evaluate the risk of similarly situated consumers. Your credit score depends in part on which scorecard you are in (and there’s no way to know which one

Now, scorecard hopping occurs when FICO moves a consumer from one scorecard to another. For example, if a bankruptcy is removed from a consumer’s credit file, they will be moved out of the bankruptcy scorecard into another scorecard. What’s interesting here is that even though you might get moved into a better scorecard, your credit score can actually move lower as a result of that change.

Why? Because you are now being compared to a different group of consumers. You may have done well when compared to others who have filed for bankruptcy. After the scorecard hop, however, you are now being compared to a very different group of consumers. Long term the switch should help, but in the short term it can lower your score.

7. Late Payments

This is the most critical causative factor for credit score fluctuations. Even one 30-day late payment can significantly affect your credit score. A late payment stays on your credit file for up to 7 years. Even if you’re doing everything else right, a single late payment can have a significant, negative impact on your credit score.

A credit score is a numeric valuation that lenders use, along with your credit report, to evaluate the risk of offering you a loan or providing credit to you. The FICO score is the most commonly used of the credit scores. It is calculated using different pieces of data from your credit report, including:

• payment history: 35%
• amount of debt relative to credit limit (credit utilization): 30%
• length of credit history (the longer the better): 15%
• types of credit in use (having current installment loans and revolving lines like credit cards helps): 10%
• new credit/recent credit applications (a hard inquiry can ding your credit for several months): 10%

Your credit score affects your ability to qualify for different types of credit – such as car loans and mortgages – and the terms you’ll be offered. In general, the higher your credit score, the easier it is to qualify for credit and obtain favorable terms. Because a lot could be riding on your credit score, it pays to keep track of it and to work towards improving it, when necessary. You can get a free credit report from each of the three big credit agencies – Equifax, Experian and TransUnion – but they will charge a fee if you want to see your actual credit score. The good news: You may be able to get your score for free from your bank or credit card issuer; here’s how.

Changing Times

Barclaycard US and First Bankcard (the credit card end of First National Bank of Omaha) were the first to sign on (in 2013) when the program launched, and since then others have joined in, including Citibank, Chase, Discover, Digital Credit Union, the Pentagon Federal Credit Union, U.S. Bank and North Carolina’s State Employees’ Credit Union. Ally Financial began offering free credit scores to auto loan customers in 2015, and Bank of America subsequently made credit scores available to cardholders for free.

Getting Your Score

If your bank or credit card issuer offers free credit scores, you should be able to check your score either online by logging into your account, or by reviewing your monthly statement. If you’re not sure whether your bank provides access to free scores, or if you have trouble finding your score, contact customer service for assistance. There are other resources to see your credit score or credit report for free, as well. If you’re wondering whether you should pay to see your credit score, the answer is probably “no.”

In addition to free credit scores, some banks offer benefits designed to help you understand – and improve – your score. First National Bank, for example, gives you 24/7 online access to your FICO score and shows you which key score factors have affected your number. And Barclaycard US provides your credit score, plus up to two factors that affect it, a historical chart that tracks it and email alerts any time your credit score has changed. 

It’s important to note that not all credit scores are created equal, and the various banks and credit card issuers may provide access to different scores. Soon after the launch of the FICO Score Open Access Program, credit bureau Experian introduced a similar program, which allows banks to share its VantageScore credit score with consumers. 

Today, these two systems operate on the same 300 to 850 point scale, and each uses similar criteria to calculate the scores, but they weigh each item differently. With FICO, for example, your payment history represents 35% of your score; for VantageScore, it accounts for around 40%. The result: The two scores will generally differ, even for the same person, on the same day. That’s not necessarily a bad thing, but it’s something to be aware of so that you can make sure you are comparing apples to apples when tracking your scores.

The Bottom Line

Your credit score affects your ability to obtain credit, and the terms you’ll be offered. Up until recently, the credit score industry was fairly covert, and it was difficult (or expensive) for most people to get their hands on their score. Today, however, a growing number of banks and credit card issuers provide credit scores free of charge, which is hugely valuable for consumers trying to track and improve their credit health. 

Will my FICO^® Scores drop if I apply for new credit?

If your [FICO Scores] change, they probably won’t drop much. If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most Credit Scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on your credit scores.

What is an “inquiry”?

When you apply for credit, you authorize those lenders to ask or “inquire” for a copy of your credit report from a credit bureau. When you later check your Credit Report, you may notice that their credit inquiries are listed. You may also see listed there inquiries by businesses that you don’t know. But the only inquiries that count toward your FICO Scores are the ones that result from your applications for new credit.

Does applying for credit affect my FICO Scores?

FICO’s research shows that opening several credit accounts in a short period of time represents greater credit risk. When the information on your credit report indicates that you have been applying for multiple new credit lines in a short period of time (as opposed to rate shopping for a single loan, which is handled differently as discussed below), your FICO Scores can be lower as a result.

How much will credit inquiries affect my score?

The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on one’s FICO^®Scores. For most people, one additional credit inquiry will take less than five points off their FICO Scores. For perspective, the full range for FICO Scores is 300-850. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part. Much more important factors for your scores are how timely you pay your bills and your overall debt burden as indicated on your credit report.

Does the formula treat all credit inquiries the same?

No. Research has indicated that FICO^® Scores are more predictive when they treat loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, FICO Scores ignore inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your scores while you’re rate shopping. In addition, FICO Scores look on your credit report for rate-shopping inquiries older than 30 days.If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry. For FICO Scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO Scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO Scores.

What to know about “rate shopping.”

Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, FICO Scores ignore mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your scores while you’re rate shopping. In addition, FICO Scores look on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry. For FICO Scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO Scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO Scores.

A credit rating or score (also called a Beacon or a FICO score) is not part of a regular credit report. Basically, it’s a mathematical formula that translates the data in the credit report into a three-digit number that lenders use to make credit decisions. 

Factors in determining a credit score:

Payment history. A good record of on-time payments will help boost your credit score.Outstanding debt. Balances above 50 per cent of your credit limits will harm your credit. Aim for balances under 30 per cent.Credit account history. An established credit history makes you a less risky borrower. Think twice before closing old accounts before a loan application.Recent inquiries. When a lender or business checks your credit, it causes a hard inquiry to your credit file. Apply for new credit in moderation.

Source: TransUnion Canada

The numbers go from 300 to 900. The higher the number, the better. For example, a number of 750 to 799 is shared by 27 per cent of the population. Statistics show that only two per cent of the borrowers in this category will default on a loan or go bankrupt in the next two years. That means that anyone with this score is very likely to get that loan or mortgage they’ve applied for.

What are the cutoff points? TransUnion says someone with a credit score below 650 may have trouble receiving new credit. Some mortgage lenders will want to see a minimum score of 680 to get the best interest rate.    

The exact formula bureaus use to calculate credit scores is secret. Paying bills on time is clearly the key factor. But because lenders don’t make any money off you if you pay your bills in full each month, people who carry a balance month-to-month (but who pay their minimum monthly balances on time) can be given a higher score than people who pay their amount due in full. 

This isn’t too surprising when you realize that credit bureaus are primarily funded by banks, lenders, and businesses, not by consumers.

How can I get a copy of my credit report and credit score?

You can ask for a free copy of your credit file by mail. There are two national credit bureaus in Canada: Equifax Canada and TransUnion Canada. You should check with both bureaus.

Complete details on how to order credit reports are available online. Basically, you have to send in photocopies of two pieces of identification, along with some basic background information. The reports will come back in two to three weeks.

The “free-report-by-mail” links are not prominently displayed — the credit bureaus are anxious to sell you instant access to your report and credit score online.

For TransUnion, the instructions to get a free credit report by mail are available here. For Equifax, the instructions are here. 

If you can’t wait for a free report by mail, you can always get an instant credit report online. TransUnion charges $14.95. Equifax’s rate is $15.50.

To get your all-important credit score, you’ll have to spend a bit more. Both Equifax and TransUnion offer consumers real-time online access to their credit score (your credit report is also included). Equifax charges $23.95, while TransUnion’s fee is $22.90. There is no free service to access your credit score.

You can always try asking the lender you’re trying to do business with, but they’re not supposed to give credit score information to you.

Everyone who’s ever borrowed money to buy a car or a house or applied for a credit card or any other personal loan has a credit file.

Because we love to borrow money, that means almost every adult Canadian has a credit file. More than 21 million of us have credit reports. And most of us have no idea what’s in them.

Are there mistakes? Have you been denied credit and don’t know why? Is someone trying to steal your identity? A simple check of your credit report will probably answer all those questions. And it’s free for the asking.

So what’s in a credit report?

You may be surprised by the amount of personal financial data in your credit report. It contains information about every loan you’ve taken out in the last six years — whether you regularly pay on time, how much you owe, what your credit limit is on each account and a list of authorized credit grantors who have accessed your file.

Each of the accounts includes a notation that includes a letter and a number. The letter “R” refers to a revolving debt, while the letter “I” stands for an installment account. The numbers go from 0 (too new to rate) to 9 (bad debt or placed for collection or bankruptcy.) For a revolving account, an R1 rating is the notation to have. That means you pay your bills within 30 days, or “as agreed.”

Any company that’s thinking of granting you credit or providing you with a service that involves you receiving something before you pay for it (like phone service or a rental apartment) can get a copy of your credit report. Needless to say, they want to see lots of “Paid as agreed” notations in your file. And your credit report has a long history. Credit information (good and bad) remains on file for at least six years.

What’s a credit score? And why is it so important?

A credit rating or score (also called a Beacon or a FICO score) is not part of a regular credit report. Basically, it’s a mathematical formula that translates the data in the credit report into a three-digit number that lenders use to make credit decisions. 

The numbers go from 300 to 900. The higher the number, the better. For example, a number of 750 to 799 is shared by 27 per cent of the population. Statistics show that only two per cent of the borrowers in this category will default on a loan or go bankrupt in the next two years. That means that anyone with this score is very likely to get that loan or mortgage they’ve applied for.

What are the cutoff points? TransUnion says someone with a credit score below 650 may have trouble receiving new credit. Some mortgage lenders will want to see a minimum score of 680 to get the best interest rate.    

The exact formula bureaus use to calculate credit scores is secret. Paying bills on time is clearly the key factor. But because lenders don’t make any money off you if you pay your bills in full each month, people who carry a balance month-to-month (but who pay their minimum monthly balances on time) can be given a higher score than people who pay their amount due in full. 

This isn’t too surprising when you realize that credit bureaus are primarily funded by banks, lenders, and businesses, not by consumers.

How can I get a copy of my credit report and credit score?

You can ask for a free copy of your credit file by mail. There are two national credit bureaus in Canada: Equifax Canada and TransUnion Canada. You should check with both bureaus.

Complete details on how to order credit reports are available online. Basically, you have to send in photocopies of two pieces of identification, along with some basic background information. The reports will come back in two to three weeks.

The “free-report-by-mail” links are not prominently displayed — the credit bureaus are anxious to sell you instant access to your report and credit score online.

For TransUnion, the instructions to get a free credit report by mail are available here. For Equifax, the instructions are here. 

If you can’t wait for a free report by mail, you can always get an instant credit report online. TransUnion charges $14.95. Equifax’s rate is $15.50.

To get your all-important credit score, you’ll have to spend a bit more. Both Equifax and TransUnion offer consumers real-time online access to their credit score (your credit report is also included). Equifax charges $23.95, while TransUnion’s fee is $22.90. There is no free service to access your credit score.

You can always try asking the lender you’re trying to do business with, but they’re not supposed to give credit score information to you. 

Credit scores are just one thing we can’t seem to get right. In fact, a recent survey found that many of us are still confused about them. This confusion can have a significant impact on our financial future. A good credit score can save you a lot of money in the long run, but a poor score will cost you a pretty penny.

We can’t bust all of the myths at once, but we can get a few of the most-often cited ones out of the way to start.

Myth #1: You have just one credit score.

This myth is one of the most difficult to bust. The reality is that you have dozens — possibly hundreds — of credit scores. In the popular FICO model alone, there are 49 different scores. And the score that you pay for usually isn’t the one that your lender sees.

Credit scores can vary based on what type of inquiry is being made (auto lender vs. mortgage lender), what credit bureau data is being used (Equifax, Experian or TransUnion), and which model is being used (FICO, VantageScore, or some other model).

The good news is that your various credit scores are highly correlated, according to a recent report released by the Consumer Financial Protection Bureau (CFPB). That means if your credit is rated “good” in one model, it should be “good” in all models.

Myth #2: Checking your own credit hurts your score.

When you request copies of your credit report from AnnualCreditReport.com or get your free credit score on a site like Credit Karma, a credit request is being made on your behalf. This is called a soft inquiry, and it won’t affect your credit at all. A soft inquiry is not used for making lending decisions — that kind is called a hard inquiry.

Checking your credit score and reports regularly is actually a good thing. It gives you an idea of where you stand and how your actions are affecting your credit rating. Plus, you can check your credit reports for inaccuracy and errors. So don’t be afraid to check up on your credit health often — it won’t hurt your score one bit.

Myth #3: Closing your oldest credit card will hurt your score.

It’s been a long-held belief by many that closing your oldest credit card account will somehow remove that card’s history from your credit report and shorten your overall credit age. That’s (thankfully!) not true. Accounts, whether open or closed, remain on your credit report.

Closed accounts in particular remain on your credit report and continue to age just like any other account. However, credit bureaus will remove them from your reports after ten years, so you won’t get the benefit of a long, on-time payment history of a closed account forever.

But there’s another factor that makes this myth sometimes true. If your oldest credit card account has a large limit, it could be greatly contributing to one of the most important factors of your credit score: your credit card utilization rate. This rate is your total credit card balances divided by your total credit card limits. It generally indicates how much you rely on credit. Closing an account with a high limit could inflate your credit card utilization.

Before you decide to close a credit card account, make sure your other credit card balances are low enough to compensate. But don’t stress over losing your good history on that card — it’ll take about a decade for that to happen.

The time it takes to repair your credit can vary widely, depending on a number of factors – from how many mistakes you have to fix to what you want to accomplish once your credit is fixed. Since people often repair their credit with a specific goal in mind – like buying a house or negotiating an interest rate with a creditor – it’s important to know how long the process can take so you can plan ahead effectively.

With that in mind, we’ve put together the information below to help you understand the different timespans that can be involved with credit repair. If you want to get started or you need more information, call us or complete the form to the right to connect with a Debt.com-accredited service provider now.

Starting the clock on your first disputes

Credit repair starts by reviewing your credit reports to identify potential errors and mistakes. It takes about half an hour to download your reports from annualcreditreport.com. That’s the time it usually takes to login in, answer the security questions and download your three reports. Then you review your reports to see what they say and take note of any errors. If you’ve never looked at a credit report before, it can take 1-2 hours to review all three reports in-full.

Once that is done, dispute letters have to be drafted and documentation needs to be gathered before you submit your disputes to the credit bureau(s). The time required for this step varies, depending on the nature of your disputes and how organized you’ve been about keeping financial records. This part of the process can take anywhere from a few hours if you’re organized to a few days if you need to hunt down statements and documentation that proves your case.

If you’re repairing your credit on your own, you determine how fast this part of the process goes because you’re in the driver’s seat. If you pay a credit repair service, the company will help you expedite so this gets done as quickly as possible.

Once your first disputes are submitted to the credit bureaus, the official clock on the responses starts. The credit bureau has 30 days to contact the creditors to verify the information and respond. This is why it’s a good idea to send your letters by registered mail, so you have proof of the delivery date.

After 30 days, the credit bureau must respond to your inquiry. In some cases, more documentation may be required if the bureau needs something else to verify or reject a dispute. As a result, there can be some back and forth before disputes are resolved.

Fact: Mistakes that appear all of your credit reports must be disputed with each credit bureau individually.

In addition, you may have to file more than one dispute letter. If you have a large number of mistakes that you identify, you usually don’t want to submit more than a few disputed items at a time in each dispute letter. As a result, you may have to submit a few disputes at a time and resolve them in sets.

In general, credit repair takes about three to six monthsto resolve all of the disputes that the average consumer needs to make. Of course, if you only have a few mistakes to correct or you repair your credit every year, it may not take as long; you might be done in just over one month. On the other hand, if you’ve never corrected your credit and have a large volume of things to dispute, it may take longer.

If you’re doing the work on your own, it’s basically going to be that you have to keep working until it’s done. If you have retained representation, your credit repair company should be able to give you an idea of how long it should take in your situation.

Rebuilding while you repair

It’s important to remember that credit repair is usually one step (often the first one) you take when you want to build your way to a better credit score. So while the repair process may only take 3-6 months, the time it takes to rebuild your credit can take longer. It can take up to a year or more to achieve a good credit score, depending on how low you start.

One thing you can do to expedite the process to better credit is to start taking steps to build credit while you’re getting items removed through credit repair. So you stay on top of your payments to build a positive payment history and take steps to reduce your credit card debt load so your credit utilization ratio is as low as possible.

This one-two punch of credit correction is how you go from a bad credit score to a good one. But you have to be patient. If you’re working towards a major goal like a new home, give yourself at least six months to a year to improve. This will ensure you have time to get the credit you need before you apply.

Once you know or estimate your credit score, avoid being declined when you shop for a new credit card by choosing a card for which you have an above-average chance of approval.

If you walk into a bank for a loan or apply for a credit card online, you have no idea what credit score is required to get approved. So if you know your score is 665 (and that’s about average), that doesn’t help you if the credit card you’re applying for requires a 670 credit score.

One of the things I try to do as a financial blogger is shed light on areas of finance that you wouldn’t know about if this stuff isn’t your job. Most people go about life, see a celebrity pitching a credit card and apply.

I sit around running spreadsheets looking at how much a 0 percent balance transfer with a 4 percent fee will save you over a card with a 10.99 percent regular APR over 18 months. (Answer: $110.27 per $1,000 transferred. You can use our balance transfer calculator to try other scenarios.)

The same is true for credit scores required for credit card approval. All you care about is getting a good card. I care about who the bank will give that card to and who it won’t.

Most credit card offers require very good credit

Let’s be clear about that. A lot of people who apply for credit cards are denied. And if you get denied too many times in a year, that can actually hurt your credit further.

Most so-called “prime” and “superprime” credit cards are only available to applicants with credit scores of 750 or better. These include most American Express, Chase, and Bank of America credit cards.

Even with good credit, there are other reasons you might still be declined—like too much overall debt or even just one recent late payment.

To help you avoid that, let’s look at what cards you can get with various credit scores. You can also browse the credit card section of this website. Each card features a minimum required credit quality category.

Excellent credit: 750+

Reaching the excellent or superprime credit level often requires at least 10 years of on-time payments and a mix of credit accounts such as credit cards, student loans, and a mortgage.

Even if you’ve responsibly used credit for up to five years, you may still be declined for many cards simply because the banks want customers who have an even longer track record of timely payments.

Obviously, if you’re in this range, you have your pick of any of the best credit cards, and you can take advantage of promotions in which the banks will actually pay you in cash or travel rewards for opening and using a new credit card. You can see examples of this with these credit cards that offer sign-up bonuses, some worth $500 or more. See recommended credit cards if your FICO score is 750 or better.

Good credit: 700—749

To have good credit, your credit scores need to be in the 700s. Scores in the high 600s are borderline “good”.

While our scale for “good” originally went as low as 680, you’ll have a much harder time getting approved for credit card offers the further below 700 your credit score is. Based on new data, we’ve increased the minimum level for “good credit” to 700. At this level of credit score, other factors—such as your income, debt levels, and recent payment history will be big factors in the banks decision to approve you.

To get a credit score close to 700, you will need to have been using credit for at least three years without any late payments. You’ll have a good chance of credit card approval provided you aren’t overextended with too much debt or too many credit card accounts.

Your credit scores are an important aspect of your financial profile.

They may be used to determine some of the most important financial factors in your life, such as whether or not you’ll be able to lease a vehicle, qualify for a mortgage or even land that cool new job.

And considering 71 percent of Canadian families carry debt in some form (think mortgages, car loans, lines of credit, personal loans or student debt), good credit health should be a part of your current and future plans.

High, low, positive, negative – there’s more to your scores than you might think. And depending on where your numbers fall, your lending and credit options will vary. So what is a good credit score? What about a great one? Let’s take a look at the numbers.

How your credit scores are set

Canadian credit scores are officially calculated by two major credit bureaus: Equifax and TransUnion.

They use the information in your credit file to calculate your scores. Factors that are used to calculate your scores include your payment history, how much debt you have and how long you’ve been using credit.

Pro Tip: You can view sample credit scores summaries from each bureau (see Equifax here and TransUnion here) to get a sense of what to expect.

What’s in a number?

In Canada, your credit scores generally range from 300 to 900. The higher the score, the better. High scores may indicate that you’re less likely to default on your repayments if you take out a loan.

Below you’ll see a general breakdown of credit score ranges and what each range means in terms of your general ability to qualify for lending or credit requests, such as a loan or mortgage.

Note that the ranges can vary slightly depending on the provider, but these are the credit score ranges you’ll see on Credit Karma. The best way to know where your scores stand is to check your credit report:

● 800 to 900: Congratulations! You have excellent credit. Keep reaching for the stars.

● 720 to 799: You have very good credit! You should expect to have a variety of credit choices to choose from, so continue your healthy financial habits.

● 650 to 719: This is considered good to lenders. You may not qualify for the lowest interest rates available, but keep your credit history strong to help build your credit health.

● 600 to 649: This is fair credit. History of debt repayment will be important to demonstrate your solid sense of financial responsibility.

● 300 to 599: Your credit needs some work. Keep reading for some improvement suggestions below.

How to go from good to great (or bad to good)

To borrow from Leo Tolstoy, all great credit scores are alike, but all bad credit scores are bad in their own way. That is, ideal credit scores are built on a similar set of healthy financial habits, but your scores can be damaged by any number of factors. There are many different issues that can hurt your credit, such as:

● Late or missed payments.
● Too many (or too few) open credit accounts.
● High credit card balances.
● High balances on loans.
● Too many credit applications.

The first step toward improving your credit health is avoiding getting trapped in the highs and lows of managing your credit.

Heather Battison, vice president of TransUnion Canada explains how consistency is key: “The most important factor for building and maintaining your scores is to pay your bills on time and in full each month. This activity demonstrates your ability to responsibly manage credit and can positively impact your credit scores.”

Order a copy of your credit report from both Equifax Canada and TransUnion Canada. Each credit bureau may have different information about how you have used credit in the past. Ordering your own credit report has no effect on your credit score.

Equifax Canada refers to your credit report as “credit file disclosure”.

TransUnion Canada refers to your credit report as “consumer disclosure”.

Order by mail or fax

• Make your request in writing using the forms provided by Equifax and TransUnion
• Provide copies of two pieces of acceptable identification, such as a driver’s licence or passport
• You must receive your credit report by mail

Order by telephone

• Call the credit bureau and follow the instructions
  • Equifax Canada
    Tel: 1-800-465-7166
  • TransUnion Canada
    Tel: 1-800-663-9980 (except Quebec)
    Tel: 1-877-713-3393 (Quebec residents)
• Confirm your identity by answering a series of personal and financial questions
• You may also need to provide your Social Insurance Number and/or a credit card number to confirm your identity
• You must receive your credit report by mail

Get your credit report online

You may pay a fee to order your credit report online if you want to see it right away. TransUnion allows you to order your credit report online once a month for free.

Get your credit score

A lender will use your credit score to determine if they will lend you money and how much interest they will charge you to borrow it. Your credit score is a number calculated from the information in your credit report. It shows the risk you represent to a lender compared to other consumers.

Knowing your credit score before a major purchase, such as a car or a home, may help you to negotiate lower interest rates.

You usually need to pay a fee when you order your credit score online from the two credit bureaus.

Some companies offer to provide your credit score for free. Others may ask you to sign up for a paid service to see your score.

Make sure you do your research before providing a company with your information. Carefully read the terms of use and privacy policy to know how your personal information will be used and stored. For example, find out if your information will be sold to a third party. This could result in you receiving unexpected offers for products and services. Fraudsters may also offer free credit scores in an attempt to get you to share your personal and financial information.

Always check to see if a website is secured before providing any of your personal information. A secured website will start with “https” instead of “http”.

What is credit monitoring

Canada’s credit bureaus, as well as many credit card issuers and financial institutions, offer credit monitoring services. These services provide you with a notification after certain updates to your credit file, such as a credit inquiry.

You could consider using this service if you think you’ve been the victim of fraud or if you have been affected by a data breach. This can help you see if somebody is trying to apply for credit in your name.

You usually need to pay for these services.