Credit Scores 101

Buying Tips & Tricks June 01, 2020

Have you ever wondered how you are scored on credit? 

We certainly have. 

In Canada, credit scores range from 300 to 900. Most lenders require a score of at least 650 for standard approvals. 

So how do they come up with these scores? 

There are 5 main factors:

1) Payment History

Missed payments are considered when determining credit scores. The good news is that “time heals all wounds.” After a few on-time payments, your credit score will be back on the up and up. 

2) Debt Load

A person’s “Debt Load” is also considered when calculating a credit score. Debt Load is just the total of a person’s debts.

3) Length of Credit History

If you’re of the mindset that avoiding debt at all costs is best, you may be limiting yourself when you decide to get a loan. A track record of success in repaying debts is important in determining credit scores. 

4) Additional Loan Applications

Thinking about making a few big purchases at once? It might be worth reconsidering. Pursuing multiple loans at once looks like “credit-seeking behaviour,” which is classified as risky behaviour. It is best to space out borrowings.

5) Diversity of Credit 

Credit scores strengthen when it is determined that a person can manage many types of loans, from mortgages to credit cards to auto loans. Successfully balancing these obligations provides comfort that a borrower can manage more. 

Now that we know the main factors of credit scores, here are some tips for improving your credit score: 

  • Auto-Payments: Set up automatic payments to ensure you never miss a payment by accident. 

  • Reduce Credit Utilization: You can start by paying down debt, with a focus on any high-interest debt such as credit cards.

  • Credit Card Billing Cycle: Ensure you’re aware of when your credit card billing cycles are. It’s best to keep your balances lower near the end of your billing cycle so that credit utilization appears low. 


  • Car Loan: Consider getting a car loan. These loans are a great entry-level credit product for those looking to start building a credit history. They’re also good for improving poor credit because there are many lenders who provide loans to lower-quality borrowers, making loans accessible. 

If you’re looking to try the last option, Click Here. We have access to the best interest rates in Western Canada. We’ll do our best to get you a low rate on an awesome pre-loved car.

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