- May 24, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Importance of Credit Score
People often worry about maintaining a high credit score, but understanding its actual benefits is crucial.
## Impact of Credit Score on Financial Offers
When comparing what a bank offers to someone with a perfect 850 TransUnion score versus someone with a fair rating of 680, it may seem like having a good score doesn’t result in significantly better offers.
## Lack of Impact on Mortgage and Loan Terms
Contrary to popular belief, having a high credit score may not always influence the amount of mortgage or loan a bank is willing to offer you, or the interest rate they provide.
Using AI Legalese Decoder can help individuals interpret and understand complex legal terms and agreements related to credit scoring, enabling them to make informed financial decisions. By breaking down legal jargon into simple language, this tool can help individuals navigate credit-related documents more effectively.
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****** just grabbed a
People who stress more about their credit score (money they don’t have) instead of the money they *actually* have (investments, saving accounts, retirement etc.) is baffling.
The posts on here of people crying about a 20 point drop is hilarious
You get lower interest rates, you can borrow more. There are basically only three credit scores: < 600, 600-750, >750. No reason to ever do anything to go from 775 to 860.
when you want to go rent a place, landlords will use it to pick which tenant they want
I use to do credit applications and I’ve declined so many people with a good score and they were always so surprised. You could still have a good score but you recently started borrowing a lot and show credit seeking behaviour and warning signs. Or you could also just not have the capacity for the loan because you bought too much house or car or both.
There is no advantage to having a higher score than the minimum set by any particular lender, which is generally around 680. It is good to stay at least a bit above that so that you don’t end up taking a hit that puts you below the threshold, so 720 or so. Lenders don’t provide preferential interest rates based on credit score in Canada.
Lenders do look at debt to income ratios. That can have a significant impact on how much they are willing to lend, particularly for mortgages.
Edit: There are a couple of comments below that seem well informed contradicting what I have always understood and repeated above. It appears there can be a benefit from having a very good score in some cases, specifically related to bonus rates on some products. This warrants furtner investigation.
>What does having a high credit score actually do for you?
You get a t-shirt, and you could also get the upgraded metal card that allows you to brag to stragglers about your credit score with no legal implications.
>People seem to stress about having a high credit score
Canadians are really bad about being influenced by Americans.
We know what the 5th Amendment means. But you’d be hard pressed to find many Canadians who know which Section in the Canadian Charter of Rights and Freedoms is our equivalent to it (hint: Section 13). People also know what a _felony_ is even though in Canada we don’t classify crimes like that.
Most Canadians can name more hisorical US Presidents than they could Canadian Prime Ministers.
And most Canadians assume the credit score matters for them as much as it does for Americans. Hint: It does not.
i get to brag to strangers about my credit score on reddit and other social media platforms…but aside from that, here is a link to read [https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/credit-report-score-basics.html](https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/credit-report-score-basics.html)
You can get cheaper insurance as well. Less likely to make a false claim than those behind on paymenys and low credit scores.
Well people will say there is no difference between a 680 – 720 – 800 score well let me spill the beans for y’all.
If you are in 800 club or beyond, well first of all banks will ask you which credit card you want ( top tier ) & 80% of times you are already pre approved for that.
You can get highest available line of credit available possible to reap out on extra utility of cash under your belt.
Most lender or CC companies can let go your missed payments, interest rate hike, or even provide a temporary limit increase just based of that.
While for car loans you get the lowest rate possible, does same apply to mortgage but the weird structure regarding mortgages also accounts for DTI ratio.
Many companies can give you a special premium discount based of your credit score.
Helps in employee background checks as well as renting applications since you are consider low risk profile.
Private lending borrowing & investing into private credit, usually people borrow money at a low % interest and invest that money into a high return private credit % to leverage their currently underlying assets. ( This is highly risky & highly debated topic )
You can do balance manipulation over your utilization & most times the lenders & credit cards companies call you black sheep since they know they are not gonna make money off you but you are making money off them. ( IYKYK )
There’s a graph somewhere on the internet that shows the likelihood to default on a loan/credit etc based on credit score, I believe the lender may also give you better rates the higher the score.
For example you have shit credit you might be getting a high lending rate because you have to go to some high risk lender. This happens with cars particularly I believe. You are riskier with the lower score so they say pay me back this much (which will be a lot) to recoup any losses should you stop paying
I think on the graph after like 780 the risk is the same as 880 etc
When one gets to 900, they can post about it on Reddit!
You usually just get things like preapproved credit cards and lines of credit.
I have a 830 credit score and it has never once helped me lol.
I have just found I get a lot of credit offer to me without asking . The other benefits are obvious I guess. If you are a renter, it’s important because landlords judge on this heavily.
I’m no expert on credit scores but it seems like as long as your score is not “bad” you are going to get the same offers as someone who has a really high score.
Credit score doesn’t take into account your income, assets you have, savings etc… which will be taken into account when you go get for example a vehicle loan or a mortgage etc…
[Insurance companies](https://www.usaa.com/inet/wc/advice-insurance-does-your-credit-score-affect-life-insurance) incorporate it into their insurance scoring system.
It helps when renting an apartment
Makes you post on Reddit.
I have near perfect (855) and when talking to a dealership about a car they said it really doesn’t matter as long as your above X number (like 700 something) you’ll get approved and it doesn’t change your rate.
So I guess it doesn’t really matter, it’s just bragging rights after the 700s.
Nothing. Credit bureaus want people to obsess over it so they can monetize it. in reality pay your bills and credit cards on time and borrowing will be easy for you.
If you have shit credit it will be difficult to take out various types of loans, and you could be stuck paying higher rates on those loans. But the gap between borderline shitty credit and excellent credit is very miniscule than between borderline shitty and shitty credit.
Credit limit is about the only thing. As your credit score increases, companies will give you higher credit limits. But that caps relatively quickly.
It’s more about your income. The all mighty dollar. Having a very high credit score has never made a difference with what rate I get for a mortgage
Barely anything lol
Ive been at 790-810 for years and theres literally nothing it does for me, nor do I ever check my score except once in a blue moon.
The reality is, in Canada all that matters is **not having a bad credit score**. Having a good credit score means nothing in particular
Nothing. I had a very high score years ago when I applied for a mortgage and I was offered the exact same rates as my friends.
a credit score is like money or a house or a car. people without a nice one will hate on you for having it
As my credit score increased over the years from 700-850, I notice more and more bombardment of spam emails (couple a week) from various banks with pre-approved credit cards and line of credit offers. Could also be related to imminent cut on BoC interest rates so banks are desperate to lock in clients at maximum fixed rate possible.
So I can’t say for certain my credit or just general financial health/salary played a role.
But I was able to hard ball negotiate with every lender to get the best rate during my last mortgage renewal, and eventually ended up with a lower rate than any I saw advertised.
On my previous mortgage renewal to that when I had an average credit rating and average salary they wouldn’t budge on the rate at all and only offered me the advertised rate.
You get to come on this subreddit and brag about it
Mines is around 800 and I just got offered higher credit limits. It doesnt do shit for me otherwise. I gotta raise my income at the end of the day to get more of an advantage really.
The bank has started calling me to offer me more credit. Which I don’t want. Which is exactly why I have a high score.
It’s basically just a meaningless number for most things – but it represents a confidence the bank has in lending to you. More money and a better score makes it easier to get money lent to you. Likewise a low score hurts what they will give to you – but ultimately the amount of money you have (and amount of standing debt and payments) matters more than the score. Unless it’s really tanked into the floor from bankruptcy or things going to creditors the difference between good and great really isn’t a huge deal.
Don’t even waste your brain power thinking about it. Just one more pointless thing to stress about in my opinion.
When u have a high credit score, u get a better int rate on some credit products (adjustment rate plus prima rate) the adjustment rate is a reflection of your score.
An indicator and not much more. When getting a loan or a mortgage they obviously look at it but are more worried about your monthly income / cash flow that takes into consideration all of your expenses. If you have great credit but poor cash flow, they could and likely would still decline you for the loan/mortgage.
Nothing really – as long as you’re 700+ it really doesn’t matter. Maybe even 650+.
My Transunion score goes up and down like a rollercoaster – pretty sure credit bureau arbitrarily change the algorithm from time to time which causes wild swings.
It affects how much loan or mortgage a bank will give you and the rate at which it’s offered
When my credit was good I worried about keeping it. But Covid happened and my mortgage lender incorrectly calculated my property taxes for my escrow account, on two separate occasions. Resulting in my mortgage being doubled on two separate occasions. Needless to say the bank can have the house. I can’t afford a double mortgage payment
The main impacts of your credit score are on unsecured credit like your line of credit and the amount you pay for home and auto insurance.
I think a very good score – I believe it’s around 725-750 gets you the best rates to buy a home. I had a score of 680 when I bought but my husband had a score of 800 and because he had that – we got the best rate available. With out him, it wouldn’t have been as good.
820 credit score on Equifax and 847 on TransUnion here, not the best out there of course, but it gets the job done.
With a score like that, you are basically auto approved for most loans, get the best rates mortgage rates, get the best rates on home insurance, easy get into rentals (Residential/commercial).
I don’t particularly care about my credit score too much, what I do is hate having debt and paying interest. That mindset just kind of leads you into a situation where you have a decent credit score.