Let’s start by asking what is the perfect credit score? It is that revered number ranging from 300 to 900 which demonstrates your creditworthiness to potential lenders. Accordingly, 900 is the perfect credit score. Immigrants to Canada should memorize that number. You may never hit it, but always aim for that.
You will get approved for most credit offers if your score is above 800. Anything above 660 is also considered very good. However, if your score drops below 600, your alarm bells should go off. Your credit report then is like your financial report card. In addition to banks and lenders, your report can be looked at by car dealerships, insurance, cell phone companies, landlords and future employers to judge your ability to manage your debts and financial obligations.
A credit score of 680 or above is required to qualify for the best mortgage rates in Canada in 2021. Some mortgage providers will qualify you with credit scores between 600 and 680, but you will pay higher interest rates.
Here’s a quick summary below:
- 741 or more: – Terrific! Your credit score is at the sky. This is where the best mortgage rates live.
- 713 to 740: You have a good credit score. You should receive a very good interest rate on and several mortgage options.
- 660 to 712: This is OK but not amazing.
- 575 to 659: This is danger zone and ranked below average credit score.
- 300 to 574: Here, your house is on fire and you need to run frantically to fix it.
Some newcomers to Canada see a sudden drop in their scores due to an error or dispute. Paul Kim, Founder & CEO @ Simple Rate counselled that “disputing and removing errors on your credit report can make a noticeable improvement in a few weeks if they were affecting your credit score heavily. But for the most part, credit scores usually make significant moves in months and years, not days and weeks.
“Getting rid of all debt in collections, paying your bills on time, and lowering your overall credit utilization will all help to increase your score steadily over time.”
It is often repeated that Rome was not built in a day. The same principle applies for your credit history.