For many Quebecers, creditworthiness is a somewhat vague term that nevertheless has a mysterious character. In this article, we present the five main elements that affect this famous credit score.
• Also read: Everything you need to know about your credit report
• Also read: Tips for buying your first home
How can a company calculating the credit score, i.e. solvency and ability to repay, of an individual or company wishing to access consumer credit, calculate a coast? What is the assessment based on? What can a consumer do to improve it?
5 things that affect your credit score
1. Payment history (35% of your rating)
It’s impossible to ignore your payment history. Paying your bills in full and on time contributes positively to your creditworthiness. Whether it’s your credit cards or your margin, be sure to pay for everything immediately upon receipt to maintain a good credit record.
Any late payments exceeding 30 days will be noted on your file and remain visible for several years. This also applies to any amount. Think about it!
2. Credit Usage (30% of your score)
Do you tend to use more than 50% of your card or credit limit? In this case, note that even if you accept the full amount after receiving the statement, this may affect your rating.
Otherwise, it’s a good idea to have a credit limit that’s about twice the amount of spending you intend to charge that card for. If your monthly card spend is $1,000, you don’t need to use a card with a limit greater than $2,000.
3. The date you opened an account (15% of your rating)
Did you know that loyalty also plays a role in creditworthiness? The longer your bank account lasts, the more lenders have access to the prospect of your long-term good repayment habits.
The better (and longer) your story, the better your score will be. Psst! Keep your accounts open as long as possible and only keep one credit card (ideally the oldest) to benefit from.
4. New loan applications (10% of your score)
Each time a new credit card application is made on your behalf, a small note is added to your file.
From an institutional point of view, this can mean that you are looking for many loans through these multiple applications and are therefore exposed to a higher risk of going into debt. Be careful, as this simple gesture can hurt your credit score.
5. Number and diversity of creditors (10% of your rating)
Creditworthiness favors a variety of accounts, but not accounts that are of the same type.
It is advisable to keep different accounts (personal loan, car loan, line of credit, mortgage loan) and not several accounts of the same type.
For example, avoid having multiple credit cards, which could indicate your chances of becoming over-indebted are higher.
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This is how you know your creditworthiness
You can get a copy of your credit report absolutely free. All you have to do is fill out the form on the websiteEquifax Or from transunion.
You will then receive your file in the mail. Some financial institutions also offer this service for free on their website. Ask your bank if they offer this service.