Whether you need to apply for a credit card from a store to buy office furniture for your small business, or you are looking for capital to be able to make the biggest investment decision of your career, your score credit will help you determine your eligibility and that of your small or medium business.
What is a credit score?
A credit score is a 3-digit number that is derived from a mathematical formula that specifically indicates your loan and bill payment history. Two of the largest credit reporting agencies in Canada are: Equifax and TransUnion which use a scale ranging from 300 to 900.
What qualifies a good credit score?
The higher your credit score, the less risk you consider the lender to be, and the more likely you are to be approved for a small business loan and benefit from lower interest rates. For information :
- 300 to 559: low credit score
- 560 to 659: passable credit score
- 660 to 724: good credit score
- 725 to 759: very good credit score
- 760 and +: excellent credit score
How do you determine your credit score?
- Your Credit Card Repayment History: Payment history includes keeping a balance on your credit card or if you have missed payments. The rule of thumb is to make your bill payments in full and not to reach your credit card limit.
- Unpaid debts: be it a student loan, or unpaid lines of credit or credit card, any unpaid debt will affect your credit score.
- The number of times you ask for your credit score: whether you believe it or not, your credit score will be affected each time you ask for it; so be careful to make sure you are up to date with the details of your report, but only do this once a year.
- Your Credit History: Your credit history begins when you acquire credit and covers the entire period in which you have been in debt.
- Any declaration of bankruptcy: if there is an archived bankruptcy, this will negatively affect your credit score since you will be considered as being a higher risk for the lender.