Education Centre

Credit 101

Credit reporting is not an exact science. Credit agencies use unique methods to calculate your credit score and determine its history. 

Credit 101

How it works

Breakdown

Banks rely heavily on credit reporting. While some banks look at both agencies when considering a mortgage application, most subscribe to just one. Credit is essential when one is purchasing, renewing or refinancing a mortgage.

Equifax and TransUnion are the two bureaux in Canada. They report on creditworthiness but it is the responsibility of the credit issuer, such as Visa, MasterCard, AMEX, to report up-to-date information to each bureau. 

Credit agencies do not actively look for new information about each of your accounts; it is the responsibility of each credit issuer to update the information to the agency to which they subscribe. The two credit agencies do not work together or share information. It is common for one agency to have outdated information, for example, if all of your financial products (Credit Cards, Loans, Accounts, etc.) are with one bank, you may not have a credit history with both agencies. This may limit our options and one of the reasons financial experts do not recommend having all of your financial products with a single institution.

Have you paid your bills on time? And if not, how late were you, when were you late and how often?

How much do you owe on each account, and how much of your credit limit have you used?

How long have you had each account?

How many credit requests have you made and how many reports have been pulled on you.

What kind of debts do you have?

Scoring

Credit scores range from 300-900. It is important to understand credit scores and their role when making a major purchase or financial decision. Speak with a broker and ensure you are in the best possible position, so if any issues arise, we can address them. Credit can be a sensitive topic, and your information is kept confidential.

Having this information available is just another tool that helps me secure your mortgage that meets your needs. It also significantly reduces the amount of credit inquires, which you will see below makes up a portion of your overall score.

VERICO COLLABRIA

MASTERCARD®

The best way to establish your credit is by keeping your longest credit account open, keeping the balances low, and having a minimum of two active cards. Take a look at our line of MasterCards®.

Credit 101