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    What Is Your Credit ScoreDo you know your credit score? Unfortunately, many people don’t. According to a report released by BMO in February 2015, only 56% of Canadians have ever checked their credit report in their lifetime and only 14% have checked it in the last year. People between the ages of 18-34 check their credit score slightly more often. 20% of this age group have checked in the last year. However, 35% of this cohort say that they do not know what needs to be done in order to improve your credit score. The study also found that 52% of Canadians do not know what is considered a good credit score. One reason that many people don’t check their credit report is that they don’t know how. Other people believe that it costs money. One-fifth of people believe that checking your credit score can hurt it.  

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    So why is a credit score so important?

    A credit report is a record of your debt. It shows the loans that you have taken out in the last six years, how much you owe on these loans, your credit limit on various accounts and whether you’ve made your payments on time. Anyone in Canada who has ever borrowed money has a credit report. The information in your credit report is used to calculate your credit score. A credit score is a three-digit number that represents the information in your credit report. Scores range between 300 and 900 and the higher the score the better. A good credit score is generally considered to be in the range of 680 – 720. The exact formula that credit bureaus use to calculate your credit score is kept secret. Your credit score is important because it can affect whether or not you are able to get loans, the rate of interest that you pay and much more. A low score can make it difficult to borrow money.

    How to Check your Credit Score

    Getting a copy of your credit report is free. The two major credit bureaus that prepare credit reports in Canada are TransUnion and Equifax. You can request your credit report from these credit bureaus for free and the report will be mailed to you. If you want to receive your credit report online (and get it more quickly) both credit bureaus charge a fee. In order to find out your credit score, you will have to request it specifically. The credit bureaus charge money for a more detailed report that includes your credit score. Finding out what’s in your credit report is important, because this information can dictate your financial future in many ways. Once you know what’s in the report, you can take steps to correct anything that could cause issues. Another important reason for checking your credit report is to look for errors, fraud or other potential problems. You’ll want to check that all accounts that you have closed are listed as closed. You’ll also want to see if there are any loans or credit cards that you have not applied for are listed on your report. This could indicate that someone has stolen your identity. In addition, the credit bureau could have made a mistake somewhere. If it did, you’ll want to make sure that it is corrected. If you find any issues, you can contact the credit bureaus and explain your situation.

    How to Improve your Credit Rating

    If you discover that your credit rating isn’t exactly where you want it to be, there are things that you can do to improve it. Paying your debts on time is an important factor in a credit report. Make sure not to miss any payments as these can negatively affect your credit rating and credit score. It’s also important to avoid applying for too much credit or running up a balance and using too much of your available credit. Using too much credit too frequently can indicate to lenders that you have having financial difficulties. Watch out for companies that promise that they can “instantly” fix your credit score. No one can go into the records at the credit bureaus and make changes or “clean up” anything. The only way to improve bad credit is by following good credit habits over time.