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What is a good credit score in Canada?

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Are you working on building your credit? Credit card debt in Canada soared during the final months of 2022 as many consumers turned to credit cards to keep up with the rising cost of living.

While credit cards can be incredibly useful when used the right way, misusing them can negatively impact your credit score and cost you money in the long run. The good news is that your credit score is constantly changing and can easily be improved with the right steps.

Below, I’ll explain how credit scores work, what a good (and a bad) score looks like, and offer some practical tips to help you improve your score.

WHAT IS CONSIDERED A GOOD CREDIT SCORE?

Your credit score is a measure of your creditworthiness. It offers transparency to lenders, allowing them to make an informed decision based on your financial history.

With a higher score, you’re deemed a more responsible borrower and may receive more favourable loan terms, credit card offers, and more. With a lower score, you represent a greater risk to lenders, which could result in higher interest rates, less favourable loan offers, and denial of credit.

In Canada, credit scores range between 300 and 900. A good credit score is a score between 660 and 724.

Here’s a look at how your credit score reflects your creditworthiness, according to Equifax:

  • 300 – 599: Poor
  • 600 – 659: Fair
  • 660 – 724: Good
  • 725 – 759: Very Good
  • 760 – 900: Excellent

HOW IS YOUR CREDIT SCORE DETERMINED?

There are two major credit bureaus in Canada: Equifax and TransUnion. Whenever you apply for a loan or open a revolving account such as a credit card, your application and payment history are recorded by the lender and sent to both bureaus.

Sometimes, there may be small discrepancies between your Equifax and TransUnion scores, as some lenders may only update one bureau rather than both.

These two bureaus use algorithmic scoring models to determine your credit score based on the following factors.

Payment history

Your payment history accounts for 35 per cent of your credit score, which makes it the most influential factor in your score. This accounts for all of your account payments and includes late payments, on-time payments, and collections accounts that you’ve defaulted on.

One of the simplest ways to maintain a good credit score is to simply make all of your payments on time.

Available credit

Your credit usage accounts for 30 per cent of your score, making it the second-most impactful credit factor. This measures the ratio of your available credit to what you’ve used.

For example, if you have a $10,000 credit limit (a single card or spread across multiple cards), and you’ve carried a balance of $2,500 over to the next month, your credit usage would be 25%.

TransUnion and Equifax recommend that you keep your credit usage under 35 per cent to maintain a positive score.

Credit variety

Credit variety makes up about 15 per cent of your credit score and accounts for the types of credit you have, such as revolving credit (credit cards), personal loans, and auto loans. Generally speaking, the more variety you have on your credit profile, the better. Creditors want to see how you handle different types of credit. Note that opening multiple credit cards will not affect your credit variety, as it would all be considered the same type of credit.

New credit applications

New credit applications account for 10-12 per cent of your score. Pursuing too many lines of credit in a short period of time can negatively impact your score.

Credit history

The overall length of your credit history accounts for just 5-7 per cent of your score and measures the age of your oldest credit account. It’s usually a good idea to keep your old credit cards open, even if you pay them off and don’t use them anymore, as this can increase your credit profile’s age. For example, if you still have the very first credit card you ever received but don’t use it, provided you don’t have to pay fees for it, it might be good to keep it open to increase both your credit history and your available credit. Both of these factors can impact your credit score positively.

TIPS TO IMPROVE YOUR CREDIT SCORE

Here are four practical tips that you can start working on today to improve your credit score.

1. Develop and diversify your credit history

If you have no credit or are just starting out, you should start developing your credit history. The easiest way to do this is to apply for a secured credit card, which you’ll fund upfront.

This is similar to a reloadable debit card, but each payment will be reported to the credit bureaus, which can boost your score and eventually allow you to apply for a traditional credit card that allows you to earn cashback on your purchases.

Once you build your credit history, you can apply for other loans as necessary.

2. Pay off your credit card each month

In addition to making your minimum monthly payments on time, you should also try your best to pay your credit cards off each month, as this will reduce your credit usage. This indicates that you’re a responsible borrower who doesn’t spend more than you can afford.

3. Spread out your credit applications

When you apply for a new credit card or loan, an inquiry is reported on your credit profile and can remain there for up to two years. If there are a lot of back-to-back inquiries on your profile, it may indicate desperation, which may decrease your score and look bad to lenders.

4. Remove negative items from your credit report

Your credit report may not be 100 per cent accurate. Periodically, creditors misreport information to Equifax and TransUnion or may neglect to report positive items, such as an account paid on time.

To determine this, get your free credit report from both bureaus and try to identify any errors.

If you find any, you can send a letter to the creditor and/or credit bureau in question asking them to amend the error. Once amended, this can improve your score for the better.

How long does it take to improve your credit score?

Depending on your current score and how good or bad it is, it could take as little as a couple of months or as long as a couple of years to see significant improvements to your score.

Individuals with a younger credit history and fewer negative items may find it easier to repair their credit compared to those with a longer credit history and a long list of negative items.

Alternatively, if you’re just starting out on your credit journey, apply these principles, and you may never have to worry about fixing your score in the first place.

Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on his Wealth Awesome website.

 

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RCMP end latest N.B. search regarding teenage girl who went missing in 2021

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BATHURST, N.B. – RCMP in New Brunswick say a weekend ground search for evidence related to the disappearance of a teenage girl in 2021 didn’t reveal any new information.

In an emailed statement, the RCMP said 20 people participated in the search for evidence in the case of Madison Roy-Boudreau of Bathurst.

The release said the search occurred in the Middle River area, just south of the girl’s hometown.

Police have said the 14-year-old’s disappearance is being treated as a homicide investigation.

The RCMP said the search “did not reveal any new information regarding the circumstances of her disappearance.”

There are no plans for another search until police receive a tip or a lead pointing to a new search area.

This report by The Canadian Press was first published Oct. 21, 2024.

The Canadian Press. All rights reserved.

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Man Tasered after trespassing in Victoria school, forcing lockdown

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VICTORIA – A middle school in Victoria was forced into a lockdown after a man entered the building without permission, and police say they had to use a stun gun to make an arrest.

Victoria police say officers received multiple calls around noon on Monday of an unknown male entering Central Middle School, leading staff to set off emergency procedures that put the building under lockdown.

Police say its emergency response team arrived within minutes and found the suspect, who “appeared to be in a drug-induced state,” in the school’s library.

A statement from police says the suspect resisted arrest, and officers had to use a Taser to subdue the man.

He’s being held by police and has been assessed by emergency medical staff.

Police say the man was not armed and there were no continuing safety concerns for students and staff following the arrest.

This report by The Canadian Press was first published Oct. 21, 2024.

The Canadian Press. All rights reserved.

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B.C. Greens’ ex- leader Weaver thinks minority deal with NDP less likely than in 2017

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VANCOUVER – Former B.C. Green leader Andrew Weaver knows what it’s like to form a minority government with the NDP, but says such a deal to create the province’s next administration is less likely this time than seven years ago.

Weaver struck a power-sharing agreement that resulted in John Horgan’s NDP minority government in 2017, but said in an interview Monday there is now more animosity between the two parties.

Neither the NDP nor the B.C. Conservatives secured a majority in Saturday’s election, raising the prospect of a minority NDP government if Leader David Eby can get the support of two Green legislators.

Manual recounts in two ridings could also play an important role in the outcome, which will not be known for about a week.

Weaver, who is no longer a member of the Greens, endorsed a Conservative candidate in his home riding.

He said Eby would be in a better position to negotiate if Furstenau, who lost her seat, stepped aside as party leader.

“I think Mr. Eby would be able to have fresh discussions with fresh new faces around the table, (after) four years of political sniping … between Sonia and the NDP in the B.C. legislature,” he said.

He said Furstenau’s loss put the two elected Greens in an awkward position because parties “need the leader in the legislature.”

Furstenau could resign as leader or one of the elected Greens could step down and let her run in a byelection in their riding, he said.

“They need to resolve that issue sooner rather than later,” he said.

The Green victories went to Rob Botterell in Saanich North and the Islands and Jeremy Valeriote in West Vancouver-Sea to Sky.

Neither Botterell nor Valeriote have held seats in the legislature before, Weaver noted.

“It’s not like in 2017 when, you know, I had been in the (legislature) for four years already,” Weaver said, adding that “the learning curve is steep.”

Sanjay Jeram, chair of undergraduate studies in political science at Simon Fraser University, said he doesn’t think it’ll be an “easygoing relationship between (the NDP and Greens) this time around.”

“I don’t know if Eby and Furstenau have the same relationship — or the potential to have the same relationship — as Horgan and Weaver did,” he said. “I think their demands will be a little more strict and it’ll be a little more of a cold alliance than it was in 2017 if they do form an alliance.”

Horgan and Weaver shook hands on a confidence-and-supply agreement before attending a rugby match, where they were spotted sitting together before the deal became public knowledge.

Eby said in his election-night speech that he had already reached out to Furstenau and suggested common “progressive values” between their parties.

Furstenau said in her concession speech that her party was poised to play a “pivotal role” in the legislature.

Botterell said in an election-night interview that he was “totally supportive of Sonia” and he would “do everything I can to support her and the path forward that she chooses to take because that’s her decision.”

The Green Party of Canada issued a news release Monday, congratulating the candidates on their victories, noting Valeriote’s win is the first time that a Green MLA has been elected outside of Vancouver Island.

“Now, like all British Columbians we await the final seat count to know which party will have the best chance to form government. Let’s hope that the Green caucus has a pivotal role,” the release said, echoing Furstenau’s turn of phrase.

The final results of the election won’t be known until at least next week.

Elections BC says manual recounts will be held on Oct. 26 to 28 in two ridings where NDP candidates led B.C. Conservatives by fewer than 100 votes after the initial count ended on Sunday.

The outcomes in Surrey City Centre and Juan de Fuca-Malahat could determine who forms government.

The election’s initial results have the NDP elected or leading in 46 ridings, and the B.C. Conservatives in 45, both short of the 47 majority mark in B.C.’s 93-seat legislature.

If the Conservatives win both of the recount ridings and win all other ridings where they lead, Rustad will win with a one-seat majority.

If the NDP holds onto at least one of the ridings where there are recounts, wins the other races it leads, and strikes a deal with the Greens, they would have enough numbers to form a minority government.

But another election could also be on the cards, since the winner will have to nominate a Speaker, reducing the government’s numbers in the legislature by one vote.

Elections BC says it will also be counting about 49,000 absentee and mail-in ballots from Oct. 26 to 28.

The NDP went into the election with 55 ridings, representing a comfortable majority in what was then an 87-seat legislature.

Jeram, with Simon Fraser University, said though the counts aren’t finalized, the Conservatives were the big winners in the election.

“They weren’t really a not much of a formal party until not that long ago, and to go from two per cent of the vote to winning 45 or more seats in the B.C. provincial election is just incredible,” he said in an interview Monday.

Jeram said people had expected Eby to call an election after he took over from John Horgan in 2022, and if he had, he doesn’t think there would have been the same result.

He said the B.C. Conservative’s popularity grew as a result of the decision of the BC Liberals to rebrand as BC United and later drop out.

“Had Eby called an election before that really shook out, and maybe especially before (Pierre) Poilievre, kind of really had the wind in his sails and started to grow, I think he could have won the majority for sure.”

He said he wasn’t surprised by the results of the election, saying polls were fairly accurate.

“Ultimately, it really was a result that we saw coming for a while, since the moment that BC United withdrew and put their support behind the conservatives, I think this was the outcome that was expected.”

— With files from Darryl Greer

This report by The Canadian Press was first published Oct. 21, 2024.

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