4 Reasons Why Credit Score is So Important in Canada
4 Reasons Why Credit Score is So Important in Canada
Posted on March 17, 2023
Although your credit score is really significant, you probably don't think about it very much until you're applying for a loan. But, given how significant a number it is, perhaps you ought to be. Perhaps, this post will provide you with some motivation to improve your credit score and prompt you to do so.
Lower Interest Rates
A high interest rate might plunge you into a terrible debt spiral; however, with a good credit score, you'll be eligible for cheaper interest rates. Interest is typically the major drawback when it comes to loans and is the main reason why credit score is important in Canada. The faster you can repay the loan and the longer you are generally in debt, the lower your interest rate will be.
A high credit score also gives you greater negotiating power when it comes to interest rates because you qualify for the best deals and may thus potentially compete with other lenders to obtain the finest deals possible.
Higher Approval Chances
Even while getting approved for a loan or credit card is never certain, having a higher credit score will significantly boost your chances. Loan acceptance is based on risk, and because they are obviously in charge of their finances, borrowers with excellent credit scores are seen as low risk.
Also, credit scores are used widely as a risk indicator in a variety of contexts, including by landlords when you're applying to rent a house or an apartment.
Higher Limits
It's not always a good idea to set a greater limit, but having the option is always preferable to not having it. Similar to how loans are granted, credit limits are determined by a risk assessment. As a result, if you have a better credit score, the lender will be more confident that you will be able to repay the debt in full.
Better Car Insurance Rates
Your credit score is one of several factors that are taken into consideration when determining your auto insurance prices. Your credit score is a factor that is taken into account, and the higher your score, the better insurance price you may receive. Neither we nor you are quite clear what your credit score has to do with your risk to crash. To learn more ways to save money on car insurance, click here.
What is Good Credit?
Credit Score Levels
All of it sounds really fantastic, no? So what exactly does a high credit score mean? How do you begin creating it? There are various methods you can start establishing good credit, which is typically defined as anything with a score of 750 or higher.
These are the key factors behind why we build credit scores. If you have the funds to pay it back, buying items on credit that you ordinarily wouldn't is an excellent place to start. This is a fast and easy way to begin establishing your credit history.
That's it! These are the 4 main reasons to build credit score in Canada. If you're looking for ways to increase credit score, we have a full guide for that. Click here to learn more.