Is My Credit Score Good? Understanding Credit Scores in Canada
Whether you’re looking to apply for a store credit card to purchase some office furniture for your small business or looking for capital to make one of the biggest investment decisions of your career – your credit score will help determine the eligibility of you and your small or medium enterprise.
What is a Credit Score?
A credit score is a three-digit number that is derived from a mathematical formula that specifically indicates your loan and bill payment history. Two of Canada’s largest credit-porting agencies are Equifax and TransUnion who uses a scale rating from 300 to 900.
What Qualifies as a Good Credit Score?
The higher your credit score: The lower you are deemed a risk to lenders; the more likely you are to be approved for a small business loan; and the lower your interest rates will be. As a general guide:
- 300 to 559 – Poor Credit Score
- 560 to 659 – Fair Credit Score
- 660 to 724 – Good Credit Score
- 725 to 759 – Very Good Credit Score
- 760+ – Excellent Credit Score
How is Your Credit Score Determined?
- Credit card payment history: Payment history includes carrying a balance on your credit card or if you’ve missed payments. The golden rules are to make bill payments in full and not to max out your credit card.
- Any outstanding debts: Whether it’s a student loan, line of credit or credit card debt; any unpaid debt will affect your credit score.
- The number of times you’ve recently asked for your Credit score: Believe it not, your credit score is impacted each time you ask for it; be diligent in making sure that you are up to date with the details of your report, but only do so annually.
- Credit history: Your credit history starts when you first acquired credit, and spans how long you have been in debt.
- Any filings for bankruptcy: If there is bankruptcy on record, this will have a negative affect your credit score, as you will be deemed a higher risk to lenders.
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About the Author
Lendified is Canada's premier online lender for small businesses. The company was founded by former bank executives dedicated to provide businesses with fast, easy, and affordable financing. The Lendified team regularly produces blogs and guides to help small business owners succeed.