There are many misconceptions concerning Canadian Credit Scores. The average person who is employed and making payments on credit will believe that they have good credit. Some may have even pulled a credit report from one of three reporting agencies and are convinced because their score is average or above that they have good credit. This is not true.
Credit score reports may vary from reporting agency to reporting agency and the information that is made available to potential creditors will vary as well. In some cases, your creditors may have access to far more information than recent history and that prior late payment history could be a serious problem for consumers seeking financing.
A good job, even with good pay, is sometimes not enough to secure financing if what you owe is more than your income can carry. Creditors often look at debt service ratio when determining an individual's credit worthiness. A great job with great pay is also not enough to secure an approval for credit if the job is new or if you are self- employed.
New Canadians or consumers that have had no past credit won't have a credit history to refer to. Consumers who rent rather than own will not be viewed the same as a homeowner. Some financial institutions may actually compare your income, expenses, credit history and assets to predetermined profiles for individuals at various life stages. This is to decide if you fit the criteria of someone who is responsible with their finances.
Why is a strong financial profile important?
A strong financial profile will help you secure better interest rates and cause financial institutions to compete for your business. This will save you money!
In order to understand and create a plan to strengthen your financial profile, you need to fully assess your complete financial profile.
As a consumer, you should ask questions of your financial institution and get their perspective on your financial situation. You may also want to seek competing perspectives from other banks. They may or may not have the ability or time to personally assess the strengths and weaknesses of your financial profile without running a credit report and they will probably try to sell their products at the same time. This may or may not be in your best interest.
There is an online service that offers a personalized,
comprehensive Financial Report Card that will rate you on areas that major financial institutions look at when evaluating. The service www.trueassess.com will highlight strengths and weaknesses and provide you with suggestions on how you can improve in specific areas. There is no other online service that will independently help consumers understand how banks will view their personalized credit without trying to promote other financial products.
Your financial credibility is based on more than just a credit score. Understanding your financial profile will provide the basis to strengthen your position which will save you money!
