Understanding the Key Factors Influencing Your Credit Score in Canada
Significant investments, such as buying a car, often require a loan. When you seek an auto loan or any other kind, you’ll encounter a credit check. Before you get to that stage, it’s helpful to know whether your score is high or not. Check out the key factors influencing credit scores in Canada to determine if you’re in a good position. Plus, work out what you need to do to improve your score.
5 Key Factors That Impact Your Credit Score
A good score is essential to getting the best deal on your auto loan. Several aspects of your history and behaviour have an impact. Let’s take a look at the credit score factors that influence your borrowing power.
Payment History
One of the most significant factors is your payment history. Your score is based on whether you pay on time. One or two late payments aren’t going to change it a lot, but if you have several from the last seven years, then you coils have a bad credit score.
High Balances Relative To Available Credit Limits
Having a lot of debt isn’t necessarily bad, as it’s all relative. If you use high percentages of the available funds, it can affect your rating. Being close to your limits in several areas demonstrates that you frequently owe a lot and could be maxed out. It doesn’t make an attractive prospect for lenders.
Credit History
How your history looks is one of the factors, but your chances of borrowing also depend on the length of your history. The more a lender can see, the better their picture of your financial history will be. Your credit report includes any active debt but will also show closed accounts from up to six years ago.
New Credit Accounts
If your credit report shows that several financial checks have been performed recently, it could lower your score. The amount of new loans you take out or even just apply for is an important factor when it comes to financing. That’s particularly the case when you seek lots of new credit within a short space of time.
Types of Credit
Your history is vital due to its length, but the types of borrowing will also be examined. Having experience in multiple forms of credit is good, although only if you show that you manage them responsibly. Showing that you can balance revolving credit and installments demonstrates that you’re a trustworthy borrower.
Find Out More About Your Score
Now you know what influences your score, it’s time to get your financials in order. Your next step is to speak to Progressive Auto Sales in Sarnia, Ontario. The team can get you a free Equifax credit snapshot without it impacting your score.