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What is a Good Credit Score in Canada?

So. You know what your credit score is but what does that mean? Is it good? Is it

bad? What is that magic number that you're going to need to secure that car

loan and what happens if your magic number isn't so magic how do you change

or improve your score in this video I'm going to teach you exactly what a good

and a bad credit score is in both Canada and the US and how you can change and

improve your score

hello everyone welcome to the ReadySet life youtube channel my name is brittany

and i'm a financial coach who makes videos all about helping you take the

fear out of finance so that you can live the rest of your life I put out new

videos every single Thursday so if you think that you might be interested in

seeing more like this just hit that subscribe button and the

notification bell so you won't waste any of my new uploads alright so last week I

taught you what a credit score was and how to check it but how do you know if

it's actually good that is what we're going to be talking about today if you

missed last week's video I'm gonna link it up above because I suggest that you

also watch that one as well that's going to be really helpful in figuring out how

the information from this video can relate to your personal situation

so what is considered good credit obviously it will depend on the company

that you're asking to loan the money from where the line is between good and

bad credit however in general the higher that your number the better your credit

is if we take a look at Equifax and remember from the last video I said that

that was one of the top official credit bureaus they say anything from 660 to

724 is considered good credit anything from 725 to 759 is considered very good

credit and anything from 760 and above is considered excellent credit this

means that anything below 660 is considered bad credit now if you've

already checked your credit and you find yourself in that zone don't freak out

yet there are definitely ways that you can improve that number and it really

does depend on kind of where you are within that lower than 660 range so for

example from 562 660 you might actually be still okay for getting a loan you

just might not have great loan terms or have a lot of wiggle room on what

they're willing to give you however if you're on that lower end that 300 to 560

range that's where we're going to run into some problems so if you do find

yourself here how do you turn it around let's look at how these scores are

calculated

no one knows with 100% certainty on how credit scores are calculated the

bureau's don't release their exact formulas and if they did it would be way

too easy to cheat the system however we do know the factors in which they're

looking at and have kind of a rough idea of how much each of them matter credit

history is a big one lenders the people that you're borrowing

the money from want to know that you have a long history of properly repaying

debt so they can know that it's more likely that you're going to repay theirs

the longer your accounts have been opened the better if you don't have a

credit history it can be pretty difficult to get approved for credit

it's kind of like the chicken and egg scenario or applying for one of those

entry-level jobs that require three years of experience you have to have

credit to get credit it can be pretty frustrating hopefully you've got some

sort of credit card in college or university that you can start with but

if you don't have any credit history start one you're going to have to be

able to show that you can pay something off responsibly and the quicker that you

start the better off that you will be along with credit history payment

history is also a pretty important factor of your score again

the lender wants to know that you are responsible with what you're given and

you stick to the agreement terms I Eve paying your loans in the amount that

satisfactory and on-time if you pull the report and you find that you've messed

up a couple of times on payments it's okay you can't fix the past but you can

be better moving forward so take a few months and be consistent with your

payments the further that you can get yourself away from that old

irresponsible you the better that you'll be able to prove that you're reformed

and your credit will improve so don't miss a payment again and you should be

okay another thing that's really important to your score is credit usage

credit usage is basically how much of that debt that you have or the ratio of

the available amount and how much you're actually using it's important to have a

credit history but if you have too many accounts open with too high balances

then it can really affect you negatively so a good rule of thumb is to make sure

that you're keeping your credit usage at or below 30% of your available credit if

you have a credit card limit of say $2,500 make sure that there's no more

than a seven hundred and five dollar balance on it at a time now

obviously the lower the balance the better it is if you can pay off your

credit right away in full that's the best-case scenario but if you're having

trouble really try and keep it as close to that 30% as possible another trick

that people use for this is to say yes to those credit increases that the banks

will try and sell you on now obviously you have to be very careful with this if

you are not a good credit user and you know if you're not and this trick isn't

for you but if you are pretty responsible with the way that you use

your credit cards say yes to those offers don't be afraid to have more

credit because there's no harm in having a higher limit on your card you do not

need to use it but it does make that percentage threshold higher and will add

to your credit score there are two types of credit checks a hard credit check and

a soft credit check if you're checking your score just for your own interest or

maybe you're getting like a background check from an employer or like a

landlord or something it's most likely a soft credit check and this type of check

does not affect your credit score a hard credit check happens when you're

actually asking to borrow money and this does appear on your report and will

actually put your credit score down a few points for a little while lenders

will take a look at the number of hard credit checks on your account because

that can be an indication of whether you're applying for just for what you

need or maybe you're in a bad financial spot and you're applying for too much

credit too fast the type of credit that you have also affects your score so if

you have a mix of different types of debts a credit card and a house and a

line of credit then it can really show companies that you're able to balance

and manage different types of payments at once which is a good thing it's not

looked down upon if you don't have different types of debt but it does add

to your score if you have kind of a more diverse portfolio

if you want to improve your score try looking at all of the factors that I

just mentioned figure out where your weakest points are and try and work on

improving those first that being said all of these factors contribute

differently to how your score is calculated so make sure that you're also

taking a look at which parts that the credit bureaus keep in priority let me

explain what I mean credit bureaus that are calculating your

score use two main formulas the Vantage score and the FICO score the formula

that the credit bureau chooses to use will really determine how much of those

factors I mentioned matters here is a breakdown of the importance of each

factor in each formula and feel free to pause and take a screenshot and do

whatever you kind of need to do to spend the time reading the graphic because I

know it's a lot of information on it

most of the credit-card bureaus use FICO formulas so I would concentrate on that

one first however an important part of your credit score no matter which

formula is being used is your payment history this definitely proves that you

can be responsible with your money so if you have a bad credit score work on

building this first always pay something on your credit cards if you can't make

minimum payments call your credit card company or loan company often they're

willing to work with you on some type of modified plan they just want to see that

you're trying and make sure that you call them if you ever do miss a payment

if you've always been really great with your payment's and you mess up one time

see if you can get it reversed you don't want that record on your credit and if

you're a loyal customer the companies are often willing to do this at least

once or twice which can make a huge difference for you alright hopefully

that wasn't too overwhelming for you I'm a pretty detailed person and I want to

know all the information so I try and put that forward but I know that it can

be a lot so please feel free to pause take a break come back to the parts of

the video whenever you need to if you like this video give it a like and if

you want to see more of my videos make sure that you click that subscribe

button and ring the notification bells so you don't miss any of my new videos

alright thanks for watching and until next time I'm wishing you great

financial health bye one of the top official credit card euros is it

credit card another trick that people use for this is to say yes and put a

friggin turtle

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