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Staying on Top of Your Credit.

Aug 25 2021

You’ve heard the term before — credit scores. It makes some people break into a sweat, nervous about their financial standing. But what exactly is a credit score and how does it impact you?  

A credit score is a numerical expression based on a level analysis of a person’s credit files to represent the creditworthiness of an individual.   

In other words, the higher the score, the more lenders will be willing to let you borrow money. This affects both individuals and businesses looking for things like mortgage loans, business credit lines, car loans and more. 

There are five main analysis factors that make up your credit score: 

  1. Payment history 
  2. Amounts owing 
  3. Credit history length 
  4. Types of credit
  5. New credit requests

For accountants and individuals. 

As an accountant, it’s important to know exactly how credit scores work so you can find the best way to help your client get difficult loans while also saving money in interest rates. 

It’s important to note that when it comes to credit, businesses get hit hard. Accounting Today shares that “…one late payment or a collection account for a specific amount related to the debt owed for each vendor listed on the individual’s report can drop a score such as Paydex by 40-plus points. This will immediately place a business into the high-risk category.” 

For individuals, it’s good to know who exactly measures your credit score and where you can find it yourself. FICO is the main company that most Canadian lenders get credit score information from. The catch? Canadians can’t view their FICO score themselves. 

But that doesn’t mean you’re blinded! FICO sells their data to Equifax, which does provide their credit score information to you. Many secondhand companies get their information from Equifax for you to check your credit. For example, Borrowell is a great app that provides a free credit check and provides a chart of your payments. Meaning, you can see every loan account you have and can keep track of your payments all in one place. 

How do I improve my credit? 

Did you stop reading to check your credit and are disappointed by it? Not to worry! There are ways you can boost and maintain your credit to prevent you from biting your nails every time you apply for a loan or new credit card. Here are some tips: 

  • Pay bills on time 
  • Pay off or reduce your debt 
  • Make any overdue payments 
  • Limit new credit requests 

If you’re looking for advice to better manage your money to maintain or improve your credit, the experts at Mowbrey Gil will assist and guide you. 

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