10 Must-Know Credit Score Facts

Your credit score plays a major role in your financial life, affecting everything from loan approvals to interest rates and even rental applications. Despite its importance, many people don’t fully understand how their credit score works. Here are 10 key facts you need to know about credit scores in Canada.

1. Two Credit Bureaus, Two Scores

Canada has two credit-reporting agencies: Equifax and TransUnion. Your credit score may vary between the two, as different lenders report to different bureaus.

2. You Can Check Your Credit Report for Free

Your credit score is based on the information in your credit report. You can request a free copy of your credit report once a year from Equifax and TransUnion to review your financial history. Many banks and financial services also provide free credit score access.

3. Credit Scores Range from 300 to 900

The average Canadian credit score is 650. The higher your score, the better your chances of approval for loans and lower interest rates.

4. Credit Scores Are Used Beyond Loans

Lenders aren’t the only ones checking your credit score. Landlords, insurance companies, employers, and mobile phone providers may also review it before making decisions.

5. Five Key Factors Affect Your Credit Score

Your credit score is based on:

• Payment history (late or missed payments hurt your score)
• Credit utilization (using less than 35% of your available credit is ideal)
• Length of credit history (longer credit history helps)
• Types of credit (a mix of loans and credit cards is beneficial)
• Credit inquiries (applying for too many new credit accounts can lower your score)

6. Errors Happen—Check Your Report Regularly

Mistakes or outdated information can negatively impact your score. Review your credit report and dispute any errors with Equifax or TransUnion.

7. A Score of 700+ is Considered “Good”

A credit score above 700 increases your chances of loan approvals, better credit limits, and lower interest rates on mortgages, auto loans, and credit cards.

8. Credit Scores Change Constantly

Your score updates regularly based on new financial activity. If you’ve made mistakes in the past, you can rebuild your score over time with responsible credit use.

9. Checking Your Own Score Won’t Hurt It

Checking your credit score through a bank or credit bureau is a “soft inquiry” and does not lower your score. However, frequent applications for new credit (hard inquiries) can have a negative effect.

10. How to Improve Your Credit Score

• Pay bills on time
• Pay off balances in full whenever possible
• Keep your credit utilization below 35%
• Maintain a mix of credit types (credit cards, installment loans)
• Apply for new credit sparingly

Final Thoughts

Your credit score is more than just a number—it’s a key part of your financial health. Even if you’re not planning to borrow money soon, maintaining a good credit score can save you money and open up more opportunities in the future.

If you need help understanding your credit score or want to improve your financial situation, reach out to me today!

Inspired by DLC Marketing Team 

A second mortgage can be a powerful financial tool for homeowners who need access to additional funds. Whether you’re looking to consolidate debt, invest, or cover unexpected expenses, understanding how a second mortgage works is crucial. Here are four key things to keep in mind before taking out a second mortgage.

1. Second Mortgages and Home Equity

The amount you can borrow through a second mortgage depends on the equity you have in your home. Homeowners can typically access between 80% and 95% of their home’s equity, depending on their financial profile.

For example, if your home is valued at $850,000, and you qualify for a 95% Loan-to-Value (LTV) second mortgage:

• Maximum mortgage amount (95% LTV): $807,500
• First mortgage balance: $550,000
• Available second mortgage amount: $257,500

2. Interest Rates on Second Mortgages

Since second mortgages pose a higher risk to lenders, they often come with higher interest rates than traditional home loans. However, alternative and private lenders may provide flexible options, making second mortgages accessible even to those with credit challenges.

3. Payment Flexibility

One of the advantages of second mortgages is the variety of payment options available. You can choose:
✅ Interest-only payments to keep monthly costs low
✅ Interest + principal payments to pay down your loan faster

Working with a mortgage broker can help you determine the best payment structure based on your financial goals.

4. Additional Fees to Consider

Before proceeding, be aware that second mortgages often come with additional fees, which may include:
📌 Appraisal fees
📌 Legal fees for mortgage setup
📌 Lender and broker fees, especially with private lenders

Is a Second Mortgage Right for You?

A second mortgage can be a better alternative to refinancing or a HELOC, depending on your financial needs. If you’re interested in learning more about how a second mortgage can work for you, reach out to me today for expert advice tailored to your situation!

Inspired by DLC Marketing Team