There are two major credit bureaus in Canada: Equifax and TransUnion. Whenever you apply for a loan or open a revolving account such as a credit card, your application and payment history are recorded by the lender and sent to both bureaus.
These two bureaus use algorithmic scoring models to determine your credit score based on the following factors., which makes it the most influential factor in your score. This accounts for all of your account payments and includes late payments, on-time payments, and collections accounts that you’ve defaulted on.
For example, if you have a $10,000 credit limit , and you’ve carried a balance of $2,500 over to the next month, your credit usage would be 25%.Credit variety makes up about 15 per cent of your credit score and accounts for the types of credit you have, such as revolving credit , personal loans, and auto loans. Generally speaking, the more variety you have on your credit profile, the better. Creditors want to see how you handle different types of credit.
In addition to making your minimum monthly payments on time, you should also try your best to pay your credit cards off each month, as this will reduce your credit usage. This indicates that you’re a responsible borrower who doesn’t spend more than you can afford.When you apply for a new credit card or loan, an inquiry is reported on your credit profile and can remain there for up to two years.
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