Rebuild Credit Canada



Are you looking to rebuild your credit rating? Rebuild Credit Canada is an educational resource helping Canadians rebuild their credit in the Canadian Credit System.

Are you in the USA? Learn how to rebuild your credit rating at our US credit system site, Rebuild Credit Rating.

The first question most people have is how do banks and business check my credit rating? The answer is, they check your credit score.

What Is A Credit Score?

The best way to explain a credit score is to say that it is like one of those magazine quizzes that we all love to complete – except that your “answers” are provided by your creditors. Just like one of the magazine quizzes, each answer has a different weighting and each answer is thus given a score accordingly – where you are doing well, points are added, where behavior is considered less favorable, points are subtracted. At the end, all the information is plugged into a complex equation and you have your credit score.

What do the Numbers Mean?

Every credit score is a 3 digit number ranging from 300 to 900 points, with 300 being the worst score and 900 being the best score. The score will also change over time – remember that your creditors are constantly updating your payment information. Also keep in mind that every time someone enquires on your score, points are lost as well.

What is the Score Used for?

A business will look at your score as an indication of how much risk is entailed in lending you money or extending you a line of credit. Basically, the higher the score, the less the risk is perceived as being.

The score will also usually factor in the interest rate that you are charged as interest is a factor of risk – the lower the risk, the lower the interest rate. For this reason alone, it is vital to keep your score as high as possible. Whilst it is certainly not the only criterion for finance, it is a big part in the credit decision.

Potential landlords may access your credit score in a bid to determine whether or not you would make a good tenant. A potential employer may feel it necessary to check on how you manage your own finances before considering you for a job managing theirs.

Is the Score Fixed?

Most of us have, at one time or another, made a bit of a blunder financially, that impacted our credit score. Fortunately, this can be rectified – whilst some adverse listings need to remain in place for a set number of years, these can be removed if you have paid them off – the creditor is obliged to, at the very least, mark these as repaid.

Also, if you get your act together, and maintain this for a few months, you will quickly find that the good behavior starts to outweigh the bad – perhaps, at the beginning of the year, you were a slow payer but, for the last 6 months you have pulled up your socks – creditors will put more stock in the last 6 months than the period preceding that.

There is a lot that you can do today about your credit score – take the first step and find out what it is. Want to learn more about how your credit score is calculated? Read our article on credit score factors. Want to check your credit score? Read our article how to check my credit score.

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