Know your credit

Smart choice wants you to be SMART about your credit!

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1.Credit info:

Credit bureaus are businesses that collect information about your debt repayment history. When a company gives you credit, they may report information about the history of your debt repayment history. This information is called your "credit history". Lenders will check your credit history to determine how much of a risk you are.

2.What is a Credit Report?

Canada has 2 major credit reporting agencies: Transunion and Equifax. Your credit history is recorded in files with these companies. These are your credit reports. A credit report is a summary of your credit history that is used by lenders to determine what type of risk you will be.


3. What is a credit score?

A credit score tells you your financial health at specific points in time. Your credit score indicates the risk you represent for lenders. 

A credit score is a three digit number that indicates the risk you represent for lenders. Credit reporting agencies use a scale from 300 – 900. The higher your credit score is, the less risk you are to lenders and the better the interest rate will be.

credit score

4.Why do I need credit?

Credit affects you in many ways:

  • Qualifying for a loan
  • Interest rate you pay for the loan
  • Mortgage Approval
  • The amount of money you can qualify for
  • Some employment opportunities
  • Access to rental units

5. What factors affect my credit score?

credit factor

6. How do I improve my credit?

  • Payment History – A good record of on-time payments
  • Outstanding Credit Balances – Keep balance low in relation to available credit Example: If the credit limit is $10,000, keeping the balance below $3,000 (or 30 per cent of the limit) will improve the score. Balances of more than $5,000 (or 50 per cent of the limit) will decrease the score. Going over the limit has an even more negative effect
  • Credit History – An established credit history makes you a less risky borrower.  Therefore, it is not advisable to close accounts, however, avoid opening accounts without intention of using them
  • Recent Inquiries – When a lender or business checks your credit, it results in a hard inquiry.  It is advisable to apply for new credit in moderation
  • Types of credit – A healthy credit profile has a balanced mix of credit cards and installment loans, as long as the balances are not too high
  • Accuracy – Order a copy of the credit report, review it carefully and correct any errors
  • Management – Pay off credit card debt instead of moving it around to lower rate cards. Moving balances to other credit cards (i.e., “balance transfer”) and closing an old account can hurt the score

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