What Is a Good Credit Score in Canada?
Loan express does not require credit checks, decline a loan based off a credit check, nor do credit checks affect the minimum approved amount of the loan. The following article is purely for educational purposes.
What Is a Credit Score and When Is It Important?
A credit score is a 3-digit number, usually between 300 and 900, which helps determine your worthiness to credit
g your payment history, the amount of debt you have, and how long you’ve been building your credit history. Credit scores are important because they are used to help lenders and creditors decide whether or not to ‘take a risk’ by offering you further loans or credit opportunities. So–what is a good credit score in Canada? Typically any score above 670.
Factors That Affect Your Credit Score
Most Canadians aren’t familiar with the factors that can affect their credit score.
Your payment history accounts for 35% of your score, making it the most important factor in being approved for financing. While a few late payments shouldn’t drastically affect your credit score, multiple late payments reflected on a credit report can. While late payments can remain on your report for years, quickly paying back, your debt can help you recover faster.
Credit utilization accounts for 30% of your credit score. If you’re using a high percentage of credit available to you, lenders consider your chances of missing a payment to be a lot higher. This means that if you have multiple credit accounts that are maxed out, your chances of being approved for financing with reasonable rates are considerably lower.
The length of your credit history makes up 15% of your credit score. In other words, the longer a given credit account has been open, the better because it shows how much experience you have managing and paying down your debt. The longer your history, the more accurately lenders can determine your ‘risk level.’
Your new credit represents 10% of your credit score. Lenders want to see what your credit shopping patterns are. Applying for a lot of new financing in a short time can drop your credit score, in part because the average age of your credit accounts will decrease and affect your credit history length, impacting your overall credit score, and in part because when it comes to new credit, gradual appears more stable.
The type(s) of credit you use make up 10% of your credit score. Responsibly managing two or more types of credit accounts is sure to affect your credit score positively, and will show lenders you are a reliable credit client. Canadians who strike a balance between installment and revolving credit usually have higher credit scores than those with just one type.
What Are the Benefits of a Good Credit Score?
In addition to increasing your chances of having a loan approved, there are several other tangible benefits to having a good credit score.
The power to negotiate: with a good credit score in Canada, you can negotiate for better interest rates and terms.
Higher borrowing capacity: lenders are typically willing to lend you higher sums if your score demonstrates you can make payments on time.
No collateral: when you have a good credit score, lenders are more likely to offer you a loan without the need for a collateral deposit.
Improved chances of credit card approval: although having a good credit score doesn’t guarantee you’ll be approved for a credit card, it certainly increases your chances.
Superior insurance rates: some home or car insurance companies determine how much of a premium to charge you by looking at your credit score. With a good score, you’ll end up paying less.
When Will We Consult a Credit Score?
We do not conduct a credit check when you apply for a payday loan at Loan Express, unless you request it, and we will never decline an application based on your credit history or your credit score!
Can We Loan Money to Someone with a Low Credit Score?
Loan Express does not require credit checks, so anyone over 18 with the required documents, an established income, and a functional bank account is eligible for an instant loan at Loan Express.