In other words, a good credit score helps you save money. This is one of the ways you’ll find your credit score really matters: the better your score, the less you pay on interest. Some places might still lend you money, although at a higher interest rate. What does a low credit score mean?Ī low credit score doesn’t mean you’ll never be able to borrow.
When you start hitting 625 and below, your score is getting low and you’ll start finding it more and more difficult to qualify for a loan. If your score is between 700 and 780, that’s considered a strong score and you shouldn’t have too much trouble getting approved with a great rate. If you have a score between 780 and 900, that’s excellent. In Canada, your credit score ranges from 300 to 900, 900 being a perfect score. It can affect your eligibility for certain loans or credit cards as well as the interest rate you get. Your credit score is used by lenders to determine what kind of borrower you are. There are simple steps people can take to improve their credit score but before we explore some of those strategies, we’re going to look at what makes a good score, how it’s calculated, where you can check yours, and why it all matters.
Understanding debt utilization ratio and the difference between hard checks and soft checks or between revolving credit and installment credit are just a small part of the story when it comes to seeing the full picture of your credit. Part of achieving financial wellness is understanding your credit score, what it means, how it’s calculated and learning practical strategies to improve it.