As a newcomer or potential immigrant in Saskatchewan, you might not be familiar with the term and process of credit scores but that’s okay, We will teach all you need to know.
A credit score, according to the Government of Canada, is a three-digit number that represents how likely a credit bureau believes you are to pay your bills on time, to assess your overall creditworthiness or likelihood of repaying credit. This is a well-known and legitimate score that banks and lenders consider when you apply for their services. A good credit score can help you qualify for low-interest credit cards, or loans, buy a new car through a lease/loan, or help you get a mortgage and rent an apartment. You may be denied these products if you have a low credit score.
In Canada, there are two major credit bureaus: Equifax and TransUnion that monitor your credit usage. To determine a credit score, they examine public records and information from lenders such as banks, collection agencies, and credit card issuers. A credit score range is between 300 and 900, the higher your score, the better your credit rating. It also depends on the scoring model used, In the case of Equifax, a good credit score is between 660 to 724, 725 to 759 may be considered very good, and 760 and above is an excellent credit score.
Fun fact, in Saskatchewan a business or individual only needs to tell you that they are checking your credit report, they are not likely to request for your consent whether written or verbal. Also in most cases, when you apply for credit or open an account with a lender, you already allow the lender to access your credit report should they need it in the future.
What is a Credit History
Basically, it is the financial record of your credit utilization and credit management. Your credit history influences your credit score, that is why it is critical to be smart about how you use and manage your credit. Remember Equifax and TransUnion-the credit bureaus? They provide credit history for a fee or a free one every 12 months, but you can also get to check on some websites for free (they might require you to sign up for their newsletter) As a newcomer in Saskatchewan with no length of credit history, you are at a disadvantage when it comes to accessing loans and mortgages but there are steps and tips to help you build your credit history in no time.
- Get a credit card: Credit cards are a thing in Canada and even if you are used to debit cards from your home country, still get a credit card and use it to buy items you would need anyway.
- Pay bills on time and in full: When you accumulate bills, the purpose of building credit history is defeated. Instead, maintain a good repayment history, always make your payments on time and improve your credit score.
- Use credit wisely: Don’t go over your credit limit. Borrowing more than the authorized limit on a credit card can lower your credit score.
- Limit the number of times you apply for credit: This is to avoid frequent inquiries or credit checks of your credit report. If there are too many credit checks in your credit report, lenders may think that you are trying to live beyond your means.
The trick to having a good credit score is not to overshoot your budget for needs and wants. Consider your options well before you make that next purchase because you have a credit card in hand.