Have you been struggling to land your dream job? Maybe it’s not your qualifications that are keeping you back but your credit score. Yes, I said credit score. Mortgage lenders are not the only people who can access your credit history. Employers, landlords, and even cell phone companies can review your credit history. Before sending in that next job application, it’s a good idea to check where your credit stands.
What Does A Good Credit Score Mean?
Your credit score is a three-digit number between 300 and 900 that is used by lenders to determine how dependable you are with paying back debt. When you have a good score you have done a good job of paying back your debts. This will more likely qualify you for new credit with a better interest rate.
Your credit score is made up of a number of factors including missed bill payments and how long you’ve been using credit. The two credit bureaus in Canada, TransUnion and Equifax collect all your credit information and place it into a model to calculate your score.
* Requesting a copy of your credit report either by you or a lender is not included in your credit score.
What Affects Your Credit Score
The scary thing about credit is that it does not take long for your score to decline. Even a $5.00 balance on a credit card that has not been paid can be marked as a loss by the lender. This indicates to the bureaus you did not pay that debt.
Common credit score killers are:
Late cell phone payments
Missed credit card payments
Too many open credit accounts
Loan balances that are over 35% of the total limit for an extended period of time
Employers that are in the government or financial sectors may look at your credit history to determine how well you manage your own money. If you have a previous lien on a vehicle and require your car to conduct your job, employers may also pass you over.
Understanding Your Score
The credit bureaus maintain your credit history for at least the past six to seven years. That means that the first credit card you ever applied for could still be on your credit report. The best place to start with understanding your credit score is to request a free credit report from TransUnion or Equifax.
Note: Your bank may also give you the option to pull your credit report through its online banking platform. However, this won’t be the most accurate representation of your credit score. TransUnion or Equifax will be the most accurate reports.
The report will list all the credit tools that you have such as credit cards, personal lines of credit, vehicle leases, and mortgages. You can review the balance and payment history to see if you have any late or missed payments.
It is great to review your credit report at least once a year. This ensures the information is accurate and there haven’t been any fraudulent inquiries. The report will produce a number in the following ranges.
Excellent Credit: 750+
Great Credit: 700-749
Very Good Credit: 650-699
Good Credit: 600-649
Fair Credit: Below 600
The good news is that regardless of your credit score, you can always integrate new spending and debt management habits into your routine to reduce the amount of credit that you owe.
My number one tip is to not miss or skip bill payments. Credit cards, utilities, cell phones—make sure you are paying these bills on time, even if it’s just the minimum payment. These positive actions on your credit will start to have a positive effect within one to three months. Before you know it, you’ll be in the top credit scores and on your way to qualifying for a new home!
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