One of the very first things I did last year when I started to learn more about personal finance is check my credit score.
It’s about time I do it again! I’m actually a bit excited to see what it says. Last year I was rated as average when my two credit cards with balances on them and my nearly $20,000 student debt was on file.
This year I’ve paid off both credit cards, increased the limit of one and made significant headway onto my student debt.
While credit scores certainly are not everything, it is a very good thing to check.
If you have ever used credit in Canada- you have a credit score!
A credit score, or credit report, or history, is a measure of how willing future companies (banks, lenders, etc) would be to loan you more money. Basically, have you paid off what you said you would so far, do you have a history of paying on time, do you use the credit to the maximum or always carry a zero balance.
There is not a explicit formula of what goes into calculating a credit score, and there is some fair controversy over it’s accuracy in gauging financial health. Some rightly say it is actually just a measure of how good you are at carrying a balance but paying the minimum on time! But if your future may involve a car loan, mortgage, or professional student loans (like me!), it’s an essential thing to check every 6 months- a year.
The Office of Consumer Affairs with the Government of Canada lists all the aspects about credit scores, from where to get a free credit history, to ways to improve your score, to correcting any mistakes you may find. It is important to read your credit report very carefully and ensure there are no mistakes. Last year I got an online report from Equifax, but this year I’m sending a fax to TransUnion Canada.
Make sure all the credit cards and credit listed are actually the credit you use! Ensure your name is spelled correctly and all the personal information lines up with your reality.
When is the last time you checked your credit score?