What is a Credit Score and How Does it Work?

What is a Credit Score?

A credit score is a three-digit number that tells a lender how reliable you are as a borrower. Your credit score is calculated by using the information in your credit report and a formula determined by Canadian credit bureaus. Essentially, your credit score is your financial health pulse and tells lenders all about your financial past; the good, the bad and the ugly.

Credit scores can range anywhere from 300 to 900. Having a score somewhere between 720 and 900 is considered good. A good credit score tells a lender you’re reliable and have made sensible financial decisions in the past. A history of timely bill payments, a low debt-to-income ratio, and a minimal number of outstanding debts are all factors that contribute to a good credit score.

A score between 650 and 720 is considered average. It tells lenders you might have made a few financial missteps in the past but overall you are a good candidate for a loan and have a relatively stable borrowing history. After all, we’ve all made a few financial stumbles at some point in our lives.

A score below 650 means you’ve likely had some faults and late payments in the past and some banking institutions would consider you to be a higher risk than people with a good credit score. A history of late payments, a high debt-to-income ratio, and outstanding debt are all factors that contribute to a bad credit score.

Most people don’t realize that applying for credit multiple times can actually negatively impact their credit score. Applying for multiple vehicle loans or credit cards in a short period of time can do serious damage. When it hits the point of approval, it’s considered a hard hit and will work to bring down your overall credit score.

How Do I Improve My Credit Score?

There are several ways you can build up your credit score. Maintaining a low debt-to-income ratio, applying for a low interest loan and keeping your credit accounts open longer are just some of the ways you can improve your credit score overtime. However, the most important thing you can do is pay your bills on time.

At Cashco Financial, our associates work with you to get you back on track and paying your bills in a timely fashion. Whether it’s a phone, credit card or utility bill, making a series of on-time payments is the best way to climb the credit-score ladder and improve your score for the future.

Make The Best out of a Bad Credit Situation with Cashco Financial Flex Loans

Cashco Financial is here to help customers build up their credit. While most banks offer little flexibility in terms of loans and payment options, Cashco has developed a new product called Buy Some Time that allows people to protect and plan for their future while finding relief from the stress of missed payments and NSF Fees.

With the Buy Some Time package, customers have the option of skipping a payment with no fee attached every six months. The package also waves the first NSF charge on a missed payment. The second late payment is $10 and the third NSF is $45, which is what most banks charge the first time around. And, after four months of consecutive on-time payments, we reset the missed payment charge back to zero.

With the Buy Some Time package, you can enjoy the peace of mind that comes with having some breathing room. It relieves some pressure while still allowing you to rebuild your credit with the help of Cashco products and loans. Our Buy Some Time customers also get exclusive access to our monthly loan payout program that could potentially have your loan paid out in full. Just another one of the many ways Cashco is helping underbanked Canadians take control of their finances and build for a brighter tomorrow.