Your Credit Score – Why does it Matter?
urLoanTM is all about helping Canadians from coast to coast improve their financial knowledge. When you seek a term loan from urLoanTM we want you to understand its impact on your finances, your monthly budget, and ultimately use it as a tool to improve your financial health. Although consumers who are approaching urLoanTM to borrow funds don’t need to worry about their credit score being a reason they may be declined for a loan, it is still a critical measure to understand in your everyday life. If you want to be a home owner one day or borrow from a commercial bank at a rate close to prime, then it’s important you take your credit score seriously and understand how it is impacted and can be improved.
There are two major credit bureaus in Canada, Equifax and Transunion. Both of their credit scores range from 300 to 900. Ultimately a higher credit score is viewed favorably by a potential lender and although these same lenders look at a variety of factors and metrics when making a credit decision. A higher credit score basically tells the lender you are a low risk to default on your loan to them and this could mean one of the following items for you:
- obtain a loan faster and with less requirements;
- obtain a lower interest rate loan;
- obtain a higher credit limit credit card;
Ultimately, different lenders set their own policies for taking on credit risk, and may consider other factors such as your income, when analyzing your creditworthiness for a particular loan. Your credit score can be impacted differently by different factors, depending on if Transunion or Equifax is assessing them. Here are some factors that have a large impact on your score:
- Number of inquiries in previous 12 months;
- Total balance for open national card trades;
- Total number of other inquiries;
- Collection matters and arrears.
If you are interested in learning more about your credit score, contact Equifax or Transunion through their websites directly. Typically, your credit report can be purchased for a small fee and more importantly, when Equifax or Transunion pull your credit bureau for you directly it doesn’t show as an inquiry on your credit bureau. Alternatively, if you are an existing customer of urLoanTM or have just applied and are awaiting a response, call our loans department and speak with our loan representatives. They would be happy to give you insight into your credit bureau score and how it may or may not be perceived by other lenders. We look forward to hearing from you.