While your credit rating looks at your credit history, your credit score measures your financial health at a set point in time. Credit agencies use a number of different factors to arrive at your credit score. These include:
- Your payment history
- If you’ve ever declared bankruptcy
- How much money you owe
- How long you have had credit
- The type of credit you use
- If you’re trying to get more credit (for example, there have been recent requests for your credit report).
The first three factors are the most important.
Your credit score will be between 300 and 900. The higher your score, the more likely you are to get a loan. A higher credit score can also help get you a lower interest rate. But there’s no guarantee.
You may need a credit score of 750 to lease that sports car, but your landlord may be fine with 650. It’s up to each lender to decide.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.