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Sands & Associates Vice-President and licensed Trustee Blair Mantin appeared on today’s CTV Morning Live segment “Ask an Expert”. Today’s episode explores credit scores, and how they can be improved.

Mistaking American credit laws for our own and a lack of clear information can make credit history and scores a confusing subject for Canadians. Typically lenders will have their own policies about what the lowest permissible score is in order to be extended credit. A credit score is often also used to determine interest rates and set limits for credit granted.

Watch the clip here, and read more below:

What is a Credit Report?

  • A summary of your credit history including personal information available through public records.
  • If you’ve ever used any type of credit you will have a credit history.
  • Contains information about debts, including when accounts were opened, balances, whether or not payments are made on time or missed, and whether or not credit limits are exceeded.

What is a Credit Score?

  • A credit score is calculated based on information contained in your credit report.
  • Canadian credit scores range from a low of 300 to a high of 900.
  • Points are gained for favourable actions, and lost for actions demonstrating difficulties.
  • Credit scores can vary between lenders because they often have different scoring systems specific to their institution.

Credit scores and history are generally not the only things a lender may consider. Income, any assets you may have, as well as your relationship with the lender can also impact your credit application. If you’ve been declined by a lender, ask questions as to why and what steps they suggest you take going forward.

It’s important to know that a credit score is not permanent and can change dramatically in as little as 2 years.

Improving Credit Score

  • Request a copy of your credit report to check if for inaccuracies. A free report can be obtained from Equifax or TransUnion of Canada by mail. Request any errors be corrected and report any fraudulent transactions immediately.
  • Consider applying for a secured credit card with a low limit to start, be sure to confirm that a specific lender’s card will be reported on your credit history.
  • Ensure all payments are made on time and keep your borrowing well within the limits.
  • Avoid falling into old, financially-harmful habits such as borrowing from one line of credit to pay another, relying on credit for daily living costs, or using credit for purchases you can’t afford.
  • Pay attention to all Missed cell phone payments are the number one reason people get denied for mortgages.

Remember that your credit score alone is not an accurate rating of your financial health. For example, you may have an “ideal” credit score but be unable to manage your debt effectively or to pay down the debt in a reasonable amount of time. Conversely, immediately following a bankruptcy a person’s credit score will be poor – but they’re debt-free and can start to rebuild because of the “reset” the bankruptcy has provided.

With over 29 years of experience, Sands & Associates is BC’s largest firm of Licensed Insolvency Trustees focused exclusively on assisting individuals and small businesses achieve their “debt free” goals.

To meet with a representative for a free confidential debt consultation in one of our local BC offices, please contact us.