What’s a Credit Score, and Why Does it Matter?

What’s your credit score? 

Understanding and strategizing a plan to increase your credit score today can be an excellent way to head into the uncertain economic times that are predicted for 2023. Your credit score is one important indicator of your financial health and having a good score is key if you want to enjoy the power of negotiating a loan or credit with a financial institution. A credit score is a numerical rating (generally between 300 and 900) representing the perceived creditworthiness of an individual. Lenders want to know how you have made payments in the past because it tells them with great accuracy how you are likely to make payments in the future.

What’s a good credit score? According to Equifax a good credit score is generally between 660 to 724; a very good score is between 725 to 759; and a score over 760 is considered excellent.¹  

 A good credit score can: 

• Save you approximately $250,000 in interest and fees over your working life
• Help you access credit quickly and easily
• Allow you to take advantage of low interest rate products such as low interest rate credit cards and lines of credit.

What can you do to increase your score in 2023?  Here are some great steps you can take to position yourself for easier access to loans and credit when you might need it most: 

• Make sure your credit cards and loans are in your own name
• Avoid overspending
• Reduce or consolidate debt where possible
• Don’t run the balances up to your credit limit – try to keep balances below 75% of the available credit
• Don’t apply for credit cards just for the rewards – the more cards you have the lower your score will be
• Pay your bills and financial commitments on time

Source:  Equifax Canada.