Keeping Track of Your Credit Score
If you’re an adult living in Canada, there’s a good chance that at one point you’ve had to get a loan of some sort. Whether it be for a car purchase, mortgage, student loan or just day-to-day credit card, you’re taking on debt by using credit. As you use credit, you either increase or decrease your credit score, which is essentially a measurement of your level of responsibility when borrowing money. A credit score is solely for lenders to determine the level of risk you pose as a borrower.
If you’re looking to improve your credit score so you’ll have a better chance of obtaining loans with favourable interest rates, you first need to know how to check your credit score! If you don’t know your credit score, you won’t be able to adequately set financial goals. In this article, we’ll tell you how and why you should check your credit score for free.
How to Get a Free Credit Score in Canada
A common misconception many Canadians have is that in order to find out your credit score, you take what’s known as a “hard-hit” credit check. A hard-hit credit check means that it can negatively impact your credit score. Now, thanks to Borrowell, Canadian’s can check their credit score for free and without negatively impacting their credit score. All you need to do is fill out a form with some of your information and verify your identity and then you’ll receive your credit score!
Why Is It Important to Check Your Credit Score?
Regardless of whether you have perfect credit or horrible credit, it’s critical you know where your credit stands. A credit score is much like a financial report card for adults, so if you have a low score, you can begin making adjustments in your lifestyle and spending to improve it. Luckily, Borrowell allows you to opt into monthly updates to let you know if your credit score has changed for the better or the worst.
Always Look to Improve Your Credit
Even if you have great credit, you should always aim to at least, maintain your good standing. You can maintain/improve your credit by keeping your credit utilization ratio down, paying bills consistently and in full and by paying off any outstanding debts. The credit utilization ratio is the amount of credit that’s available to you versus how much credit you’re using. So if your credit card limit is $10,000 and your credit card balance is at $5,000, you’re utilization ratio is 50%. A good rule of thumb is to keep your utilization ratio below 70%.
3 Reasons to Keep Track of Your Credit Score
1. Being Vigilant About Unexpected/Suspect Changes
While your credit score is bound to fluctuate based on your spending habits, there are times when you need to take action if you notice something suspicious. Unexpected changes in your credit score can be an early indicator of identity fraud. Identity theft continues to be a growing problem in Canada and it’s not as uncommon as most people think. These thieves may open new accounts and take out loans in your name and never repay them. This is why it’s important to keep track of your credit score regularly.
2. You’re About to Apply for a Loan
If you’re about to apply for a loan on a house or car, you need to know where your credit stands. Can you imagine saving up a ton of money to put a down payment on a house or car, only to find out your credit score was lower than you thought and will now cause you to pay thousands of dollars more in interest than you had anticipated? Don’t let yourself get in this situation, keep track of your credit score and have an accurate estimate of your mortgage or car loan!
3. You May Qualify for Better Credit Cards
The last reason you should keep track of your credit score is that as you improve your credit through responsible borrowing, you may have access to credit cards with better perks and lower interest rates.
What is a Credit Report?
A credit report gives you a more in-depth look at your credit history compared to your credit score. It contains your credit history which includes current and prior accounts, payments and balances. It also shows any time a landlord, employer or lender checked your credit report to see how responsible you are with money.
Looking to get a Car Loan?
Now that you have an understanding of how to keep track of your credit score, maybe you feel it’s the right time to buy a car. If you want to get approved for a car loan today, all you need to do is fill out our short application!