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Behind the Curtain of your Equifax Report

It is well known that we often end up leaving aside the majority of what we learn in school and are never really taught the truly important, practical and useful things of everyday life. Everything that has to do with credit scores and files belongs to the second category. In fact, most adults are not very familiar with the criteria that come into play when calculating credit scores and with the various possible ways of improving it. Let us demystify this whole process.

Correctly Understanding the Terms and Meanings

You probably have a pretty good idea about what a credit report is, but do you understand the difference between credit scores and THE credit score (or tally)? Let us start by clearly defining the concepts relevant to the comprehension of the topic. Your credit file is a document that pertains to banking, personal, civil information linked to major events such as legal action or bankruptcy, etc. This information is gathered by your multiple creditors who can add a score to it, which in other words, is a sort of ranking in relation to your general paying habits. These results and the associated ratings are used by credit bureaus (Equifax and Trans-Union are the only authorized organizations in Canada) in order to give you an overall credit rating (THE credit rating) situated somewhere between 300 and 900 points.

Actions to Take

Now, let us take a look at what you can do to improve your credit situation or make sure it does not deteriorate. Instead of proposing an exhaustive list of right and wrong things to do in order to reach efficient and healthy credit managing habits, we will share with you three less known key elements that seem to us to be pertinent and adequate. The first recommendation, that most people ignore, is to avoid asking for too many credit applications. People who have urgent tend to knock on every possible door without considering that every single time they get denied from creditors counts as the main factor that causes the most damage to their credit rating. Another very important fact tooforeign to most: even if you pay your credit card fully every month, be mindful to not let its balance go over the critical 50% threshold of your limit (the recommended margin is between about 30-35%). Lastly, just because your bank or another credible institution offers you financing does not mean it is a good idea to accept it. Make sure you keep as clean, stable and limited (in terms of credit lines under your name) a profile as possible.

It is needless to master all details that show on your credit report or all elements taken into account in the evaluation of your credit score for you to be in good standings. Making use of good and logical judgement, and being carefully informed are determining factors in order to be financially healthy.

Posted on Nov 10, 2017

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