What is a FICO Score?

A credit score is said to be the indicator of individual’s credit worthiness. It is the measure of the fiscal responsibility a person displays in dealing with their creditors. This credit scoring was first started by FICO which is the acronym for Fair, Isaac and Co. When one talks about credit score, one is actually talking about FICO, which is usually marketed by Equifax Canada.

What are the Credit Report and Score Systems in Canada?

Wikipedia published that the systems of credit reports and scores in Canada is very similar to that in the United States, with two of the same reporting agencies active in the country: Equifax and Trans Union Experian, which had entered the Canadian market with the purchase of Northern Credit Bureaus in 2008, announced the closing[ of its Canadian operations as of April 18, 2009.
There are some key differences. One is that, unlike the United States, where a consumer is allowed only one free copy of their credit report a year, in Canada, the consumer may order a free copy of their credit report any number of times in a year, as long as the request is made in writing, and as long as the consumer asks for a printed copy to be delivered by mail. This request by the consumer is noted in the credit report, but it has no effect on their credit score. According to Equifax's Score Power Report, FICO scores range between 300 and 900.
The Government of Canada offers a free publication called Understanding Your Credit Report and Credit Score. This publication provides sample credit report and credit score documents, with explanations of the notations and codes that are used. It also contains general information on how to build or improve credit history, and how to check for signs that identity theft has occurred. The publication is available online at the Financial Consumer Agency of Canada. Paper copies can also be ordered at no charge for residents of Canada.

What do Canadians Need to Understand about FICO?

Here in Canada, the FICO Score Range can be easily understood from the Government of Canada’s publications ‘Understanding Your Credit Report and Credit Score’. But what concerns many is that individuals do not know what is the criteria involved, nor is he informed about his rating; the banks are not obliged to inform the individual about his score – the impetus is on him if he wants to know. A Canadian citizen can order copies of their credit score visiting the Equifax site at: equifax.ca. You will not receive your credit score with your FREE credit report by mail.
Any bad credit history like delayed repayments of loans and bounced checks will adversely affect their credit score. Student loans, credit cards, home loans and mortgages can all be now decided in hours as the decision is taken on the customer’s FICO Score Range, which is readily available.

What are the Acceptable FICO Scores?

This credit rating of an individual is done using comprehensive reports of that person’s credit history. It is also called a Beacon score as the largest rating company, Equifax, has been selling its scoring system under the brand name Beacon. Generally the range of FICO can be anywhere from 300 to 900; the higher your FICO, the healthier it is. One’s FICO Score Range will impact the rates at which the future loans are granted and the fees charged for the same by the financier.
The money lenders will consider your Fair Isaac Company score when you approach them for loans – for cars, study, homes, etc. If one has a FICO of 700 and upwards, it is very healthy and one can easily avail of any loans, at very nominal rates, too.
Some lenders may even offer special rates / discounts if your FICO is around 720 – 740; please check their website for such offers as the processing employee may not be impart such information; but might just pocket the same. Any FICO ranging from 680 – 699 means your rating is good, but could be improved a bit; it also means that you can avail any loan you need, in most cases. In case of scores ranging from 620-679, you are likely to get any loan you want, but it is going to cost you.
Scores between 620 and 450 may pose difficulty in getting a good deal on any loans; it essentially means you will get the loan, but on their terms. Any score below 450 makes you a bad credit risk and you are unlikely to get a loan, unless at exorbitant rates. The FICO Score Range will decide your suitability as a borrower, your interest rates and documentation required before approval of the loan.

Key Factor

One of the essential, if not the most important, is for consumers to understand perfectly the details about credit scores, ratings and FICO. These factors are always crucial to your staying healthy in as far as credit worthiness is concerned.

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