When was the last time you checked your credit score? Do you know what your current credit score is and what is on your credit report? Your credit score changes frequently and you never know when you will need a credit report. Especially in cases when they are required as a reference or as formal documentation. Even to apply for one of our online payday loans, you should be aware of your credit score. Why? When it comes getting a payday loan, it is the same process as any other loan, we check to see your current credit score before making a decision on your loan application. Based on your credit score, it helps us make a decision to the kind of loan we can grant you.
There are also other reasons as to why do you should know your credit score because it is more than just loans. Sun Life Financial outlines how a credit report gives lenders details about every loan you’ve taken out in the last six years, including credit cards, cell phones, car loans, lines of credit and mortgages. It shows how much you borrowed, whether you paid on time, and what you still owe. Based on all this, you’re given a credit score ranging from 300, which is the lowest to 900, the highest score.
Having a good credit score can help give you some financial comfort when it comes to applying for things like a mortgage or lines of credit. On the other hand, a lower credit score can prevent you from being approved for many things including credit cards or even a new cell phone. Your credit score can show you things such as how much outstanding debt you may have, how your score is impacted by how many loans you acquire, the kinds of debt you have. Having debt isn’t always a bad thing; in some cases having no debt can have a negative effect on your credit score and carrying a variety of types of debt such as student loans, credit card, and a mortgage can increase your overall score.
How do you improve your credit score?
There are ways to help bring your score up over time but will take some financial discipline. This is the most common question when it comes to credit scores – how do you get that number higher? The answer is simple – your payment history and monitoring your spending are the most important factors when it comes to your credit score. Always making your payments on time, making the minimum payment if you can’t pay the full amount that you owe when it comes to your bills, contacting the lender right away if you think you’re going to have trouble paying your bill in the full amount or on time and not skipping payments are all different recommendations that the Financial Consumer Agency of Canada provides to help improve your credit score. Not all payments are counted towards your credit score – for example, student loans. But, these payments do matter if you start missing them. If your loan or bills are sent to a collection agency, this will be included in your credit report and bring your credit score down.
How does your spending affect your credit score
They are called credit cards for a reason. So what happens when you have forgotten to make a payment? Don’t worry, it’s not the end of the world, but did you know that missing regular payments on bills such as your credit card can affect your credit score? The worst thing you can do is not make your monthly payment, always let your creditor know if you are unable to make a payment as they will usually be able to help and to avoid late fees. Missing one payment won’t ruin your credit score, but after missing two consecutive payments you will definitely see a drop in your score and your bank/credit card provider will also likely increase your interest rate.
Where to get your credit score or credit report?
Did you know you’re entitled to one free credit report a year? You can pay to order your credit report online if you want to see your score and details right away. Transunion is one company that allows you to order your credit report online once a year for free. But there are also mobile apps and websites like Credit Karma that gives you your credit score for free and helps you monitor it. Credit Karma is new to Canada and gives you options to update every single week. Over time, they’ll be adding more features to help you make informed decisions and give you useful options.
How do payday loans affect your credit score?
There are also many other ways a payday loan can affect your credit score including the length of time you’ve had your loan, your loan payment history, the interest rate on the loan, how many loans you have outstanding, and many more factors depending on your financial situation. This is because 10% of your credit score is calculated through the number of credit-based applications you make. Depending on the kind of loan you apply for, each lender including GoDay has a debt to income ratio we apply to decide whether or not you will be able to service the loan. Meaning that every time you apply for a form of credit or loan, it shows up on your credit report and numerous applications can show that you are possibly taking on more debt than you can handle. These are all things to consider when applying for a payday loan since it will show up on your credit report.
Your credit score may not always be top of mind when it comes to your finances, but it’s always good to make sure you know where your credit score stands and how things like applying for a payday loan may affect it. For more information on your credit score and what affects your credit score and credit report, visit Debt Canada here.
