Credit Score What Is It

Credit Score, what is it?

A Credit Score, what does it really mean?

A credit score is a number, generally between 300 and 900, that helps determine your creditworthiness. Credit scores are calculated using information in your credit report, including your payment history; the amount of debt you have; and the length of your credit history.

When it comes to purchasing a home, your credit score plays a big part in getting approved. There are four areas of credit scores that may affect the home-buying process.

Before heading out house shopping and falling in love with a property, you need to know what price range you can qualify for and can afford to pay. Your credit score does determine how much of a loan you can get. Lenders use this to determine the likelihood you will pay the loan back as agreed. Your score also contributes to the interest rate you can get. Generally, the lowest interest rates are offered to the lowest risk consumers, or those deemed most likely to pay the mortgage back as agreed.

Credit is something that should be started once you turn 18 years of age by applying for a credit card. Managing credit is something few are ever taught. Credit is determined by the length of time you have a tradeline​e open (credit card or car loan as an example). The longer you have it, the better it reports, if paid back in a timely manner. I always say, get a credit card, put a tank of gas on it and then pay it off. There needs to be activity on your card so just acquiring a credit card and not using it will not help build your credit.

Credit is also affected by the percentage of balance you carry compared to the credit limit given. As an example, if you have a $1000.00 credit card limit and you want to increase your credit score, keep you balance below 50% of the credit limit. If the balance is at 75% of the credit limit, your score stays the same and doesn’t increase. Paying it off monthly is the best since you are not charged interest and your repayment history will be perfect.

What happens if I am late? Being late on a credit card payment effects your credit score dramatically. Every time you are late, it reports on your credit bureau, over time, it shall affect your score as it shows that you do not take your debt repayment seriously and neglect paying it on time.

Sometimes when credit is issued and not paid, whether a cell phone bill or credit card bill, if it hasn’t been paid within a required time period, it can be sent to a collection agency. This shows up on your credit bureau and affects your credit score negatively.

Late payments remain on your credit report for up to 6 years from the date it is reported. The late payment remains on your credit bureau even if you pay the past-due balance. The key is to always respect credit, pay it on time and don’t carry high balances.

Looking for credit guidance on your next home purchase, consult with your Edmonton Mortgage Broker Eva Neufeld at (780) 244-0505 or by email to

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