Mortgage News
The truth about your credit score
In the past, your credit score was intended solely to determine whether you could qualify for loans or credit cards, and at what interest rates and what limits. But now they’re checked when you get a cellphone plan, rent an apartment or even apply for a job.
Published
Lenders are placing more and more significance on borrowers' credit when it comes to applying for a mortgage, line of credit or a credit card. What many Canadians don't know, however, is what affects their score and under what circumstances it will be accessed.
Some important facts about your credit score:
- Your credit score cannot be accessed without your permission. It is becoming more common for your score to be checked when obtaining a new cell phone contract, applying for a job or renting an apartment, so ensure you know what you're signing.
- You have every right to deny someone to access your credit score.
- Credit scores range from 300 to 900. Scores from 700 up will typically have access to better interest rates.
- When your credit is reviewed by anyone other than a lender, it is considered a "soft check" and will not affect your score. A "hard check" is when a prospective lender is reviewing your report to assess if you are a desireable candidate for a loan. This kind of check can lower your score up to 14 points, so be careful when "shoppping around" for credit products. This is one of the benefits of using a Mortgage Broker when applying for a mortgage. A Mortgage Broker accesses your credit report only once.
- It is not uncommon for Canadians to find mistakes in their credit report. It is recommended to review your own report yearly to avoid this happening. (Note that accessing your report online incurs a fee. If you'd like to view your report for free, you can request a hard copy in writing from one of the major credit reporting firms; Equifax Canada or TransUnion Canada.)