Your Credit Bureau-What You Need to Know

Have you ever wondered why your credit score is as low as it is when you are diligent in meeting the monthly obligations?  It’s derived of more than your repayment history & how many inquiries you may have.  Below is the matrix that is used in determining your score:

35% of the score is based on your repayment history.  So as long as you aren’t late with your payments, you’ve got this part covered.

30% comes from the utilization of the credit.  If you have a favourite credit card that you like to use because you want the points, this can actually work against you.  The more you use it the more it negatively affects your score.

15% is derived from your balance to limit ratio.  If you can keep your balance under 50% of the limit, this is a safe margin.

10% comes from the number of inquiries you have.  You get a 30 day grace period for inquiries when you are mortgage shopping, so don’t worry about that.  But if you have multiple sources pulling your bureau this would affect your score.  But it is only 10% of the score so in the grand scheme of things it’s not very significant.

10% is derived from the type of credit you have.  For example, a bank credit card is scored more favourably than a department score card.  Why you may be wondering?  I don’t know.

Bearing all this in mind, if you keep your balance to limit ratio under 50% and make sure you never miss a monthly payment,  this will go far to ensure you get the most favourable score you can.  If you have any questions about this or anything mortgage related, don’t hesitate to contact me today at 905.336.3545 or