Why You Need A Good Credit Score
Credit reporting agencies such as Equifax and Trans Union of Canada receive information about you, the consumer, from their members. This information is entered on their system as part of your credit history and is then used as information to produce your credit score.
A low credit score means you will be more likely to be refused on an application for credit. It will certainly mean that you will be subject to a higher level of “due diligence” from the lender while they evaluate your application for credit. Even if you are approved, the interest rate you can expect to pay will be higher than you thought due to the fact that you will be considered a high risk.
Treat good credit and a high credit score as a financial asset. You will be able to buy a home or a car with a low interest rate on the mortgage or car loan. You will also be pleased that approval will be quick as there will less of a review of your credit application.
Landlords in rental apartments are now also requesting credit reports before they sign a lease to make sure you are a desirable tenant. If you are applying for a new job that requires you to be bonded or if you are being considered in a promotion, it is not uncommon for the employer to ask for your credit report. They want to make sure that you have a stable background and will not bring anything unfavorable to the company. A request by the landlord or employer for your credit report will have no effect (good or bad) on your credit report.
You are allowed one free copy of your credit report each year by regular mail. You can obtain a copy in person or on the internet but there is a charge for this faster service. You should periodically ask for a copy of your report and check it for errors. You do not want to try to fix an error while you are in the middle of trying to get a loan for a car.
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