You can find out what your credit rating is by obtaining a credit report from a reputable credit bureau, such as Equifax or TransUnion. A credit report is a summary of your credit history. It is one of the main tools lenders use to decide whether or not to give you credit.
What is Credit Rating?
Some credit bureaus report the lenders’ rating of each of your credit history items on a scale of 1 to 9. A rating of “1” means you pay your bills within 30 days of the due date. A rating of “9” means that your debt has been written off by the creditor and sent to a collection agency, or that you have made a consumer debt repayment proposal to the lender. A letter will also appear in front of the number: for example, I2, O2, and R2. The letter stands for the type of the credit you are using.
“I” means you were given credit on an installment basis, such as for a car loan, where you borrow money once and repay it in fixed amounts, on a regular basis, for a specific period of time until the loan is paid off.
“O” means you have open credit such as a line of credit, where you borrow money, as needed, up to a certain limit and the total balance is due at the end of each period. This category may also include student loans, for which the money may not be owed until you are out of school.
“R” means you have “revolving” credit, where you make regular payments in varying amounts depending on the balance of your account, and can then borrow more money up to your credit limit. Credit cards are a good example of “revolving” credit.
The most common ratings are “R” ratings. These are known as North American Standard Account Ratings and are the most frequently used. The “R” indicates that the item being described involves revolving credit. If you always pay on time, it will be coded an R1. If an amount was written off because you never paid it back, it is coded R9. The R ratings are a coding system that translates “on time”, “one month late”, “two months late”, etc., into two-digit codes.
Q: How can you improve your credit rating? A: Pay off your debt in full and as quickly as possible.
By catching up on your bill payments as quickly as possible, your rating digit codes will decrease in number. For example, an R4 rating on a particular credit will go down to an R3, and then on to an R2 with continued payments. This will, in turn, affect your overall credit score.
What is a Credit Score?
Your credit score is a judgment about your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers. There are many different ways to work out credit scores. The credit-reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay. To sum up, you can improve credit by paying all of your bills in full and as quickly as possible.
Note: Good Credit Rating does not necessarily mean Good Credit Score
Too much debt will lower your score regardless of the rating
What can OCCA Consumer Debt Relief do to help?
If you cannot pay your bills on time or in full (that is, not just the minimum payment, but the full amount), then you will need some help in paying off your debt, including interest. OCCA Consumer Debt Relief is the most trusted Debt Relief Program in Canada and has helped thousands of Canadians resolve their debt for over a decade. We can eliminate interest, reduce amounts owed, and arrange payments consumers can afford..
