Our financial advisors are frequently asked by clients, “Do I have bad credit?”
It’s a fair question. Even for those who do know what their credit score is, it might not be obvious if their score is good or bad. It’s important to understand how your credit score can impact your life. Let’s take a look.

What is a credit score?

“In Canada, your credit scores generally range from 300 to 900. The higher the score, the better. High scores may indicate that you’re less likely to default on your repayments if you take out a loan.” — Credit Karma

Put simply, your credit score determines how likely you are to pay back the money you borrowed. Creditors don’t want to loan money to people who have a history of not making payments. Your score helps creditors decide if you are financially trustworthy. Typically, a score between 660 and 725 is considered good in the eyes of a lender.

Finding out your credit score

In order to know if you have a good or a bad credit score, you first need to see what your credit score is. Many banks provide a free credit score if you have an account with them. Another option is to purchase your credit score and report directly from Equifax or Transunion. They offer a reduced first month price for their subscription which you will have to join in order to get your report. They will then charge you a monthly subscription which can be cancelled at any time.

How can my credit score affect my life?

Have you ever dreamt of owning your own home? Purchasing a vehicle? Starting a business?
Having bad credit may delay you from enjoying some of life’s biggest milestones. Even if you can afford a home or a vehicle, bad credit could result in the lender deciding you are high risk. This generally results in higher interest rates than someone with good or great credit scores.

In some instances, bad credit can even cause you to be denied a cell phone contract or certain job opportunities!

How did I get bad credit?

The reason you have bad credit can be simple; you continually miss payments to pay back money you borrowed. The reason you have bad credit can be more complicated; the credit bureau misreported something on your record.

This is why it’s important to know if you have bad credit and, more importantly, why you have a bad credit rating.

Here are some factors that might have led to your having bad credit:

  • Continually missed payments
  • Only pay the minimum amount due
  • Too many open credit accounts
  • High balances on your credit card
  • Filed for too many credit applications
  • Never use your credit card