According to 86 experts, the Canadian Credit Bureau provides two types of information to display your credit history, credit report (Credit Report) and credit score (Credit Score). Canadian credit bureaus Equifax and Transunion use a scale of 300 to 900 to delineate credit scores. The personal credit score provided by Equifax is called the Beacon Score, and the personal credit score provided by Transunion is called the Empirica Score.
Generally, when applying for a loan from a bank or financial institution, you often see requirements for a Beacon score. The dividing line is usually 680 points. Those with scores above 680 are generally considered to have good credit, while those with scores below 680 are often subject to some restrictions when applying for loans.
For example, banks will require higher income, down payment or simply higher interest rates. Although it seems that 680 is an average line, in fact Canadians’ credit scores are much higher than this, so don’t be complacent if you fail. If you want a better loan repayment interest rate, work hard to improve your credit score.
The calculation method of credit score is an American patent. Like Coca-Cola’s secret recipe, it is not disclosed to the public. On July 22, 1999, Fair Isaac demonstrated a credit score calculation model when testifying to the Federal Trade Commission.
The calculation formula is very complicated, but it is divided into the following items:
1.? Credit card repayment record;
2.? Each use/repayment of the credit card Amount;
3. Length of credit history;
4. Latest credit time;
5. Credit category;
6. Number of credit records;
7. Credit activity.
The weight is from more to less. Among them, the most important factors that determine your credit score are: payment history, whether you have a history of bankruptcy and the number of unpaid debts. Methods to improve your credit score:
Credit card payment history:
Credit card debt must be paid on time. Although paying only the minimum payment amount will not reduce interest, paying dozens of dollars before the final payment date can keep your credit record from being affected.
Of course, credit agencies are not all so harsh. Generally speaking, if you pay at least the minimum repayment amount required by the other party within one month after the final repayment date, you can get some relief. Tone? No points will be deducted.
Of course, you can also apply for automatic transfer. The minimum payment required by your credit card will be automatically deducted from your bank account every month. It is also a simple solution to pay the full amount when you have time. method.
Secondly, pay all types of arrears in a timely manner and maintain sufficient payment capacity in your bank transaction account. Although an overdraft in a bank account will not affect your credit score, if we apply for automatic debit services for water and electricity bills, the utility company will be very concerned about the check bounce.
The bank describes Trade Line’s credit rating as R plus a number. R1 means that you have always repaid on time, or no later than 30 days after the final repayment date. If it exceeds 30 days, it becomes R2. , and so on, as the number increases, your credit score also decreases.
After paying off the debt, your Trade Line will return to R1. However, any rating other than R1 will be recorded by the credit company and written into your credit report history. A bad record will not only affect your credit score, but customers with problems in their credit history will be treated strictly during the loan application process, which is not a good thing. It may take you 1-2 years to establish a perfect history before you can apply for a loan.
In summary, credit card repayment records are very important for both credit scores and loans. If you really encounter personal financial difficulties for a period of time, you must also insist on paying the minimum repayment every month. Do not delay payment of the credit limit. Of course, always paying off the minimum payment is not an option for most people. Interest rates as high as 19.5% (or even higher) will definitely make you feel heartbroken.
The amount of each use/repayment of a credit card:
The higher the credit limit, not only proves that you have high credit, but also proves that you have high spending power. However, higher is not always better. A credit card limit that is too high not only results in greater losses when stolen, but also does not help improve your credit score. Of course, if you have a high credit limit and you can maintain a good balance between your credit limit and your credit limit, then a high credit limit will be beneficial to you.
So what is the most cost-effective credit limit? Generally speaking, it is recommended that you use no more than 30% of the maximum limit of your credit card, and up to 50%. If your credit card is basically full every month, the system will automatically judge that you rely too much on credit cards and will reduce your credit record.