Who Monitors Your Credit Score and Why is It Important?
There are three major credit bureaus in Canada. These are namely Equifax Canada, TransUnion Canada, and Northern Credit Bureaus. Every credit bureau may have a varied score which relies on the documents that they have for each client. In Canada, free credit reports are constantly accessible when requested. Remember that recurrent requests will not have any effect to your score as it does in other countries.
Credit scores are commonly categorized into six levels. Each level corresponds to a certain interest rate that must be paid. That is the reason that you must know your credit score. For example, you have a credit score o 659. This score means you belong under 620-659 bracket or level. If you can add to your score by just one point, it will become 660. Having this score places you in the 660-699 level, which could eventually result to a huge amount of savings in interest for a year.
It is recommended that clients must check their gross debt service ratio which is the proportion of your yearly debt commitments to your annual income. The consumers should not go beyond 20 percent. When they have a monthly income of $3,000, they must only be allocating $600 to service debts. In this manner, there is no decrease in your savings rate.
It has also been advised that unfortunately, our recent information displays that the weaker economy together with increased personal debt levels has resulted to a rising figure of clients declaring bankruptcy. Hence, this has a long-term impact on credit scores and will surely decrease the credit score of an average Canadian.
