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What Factors Impact Albertan’s Credit Scores?


Credit scores have a huge impact on the success of your financial future. Knowing what affects your credit score can help you make better decisions and manage your finances more effectively. It’s important to understand what factors are taken into consideration when calculating a credit score. Let’s take a look at some of the most important factors that influence your credit score. 


Your credit utilization ratio is one of the biggest factors that impact your credit score. This number is calculated by taking the total amount of revolving debt you have (like credit cards and unsecured lines of credit) and dividing it by the total amount of your credit limits. Generally, lenders prefer if this number falls below 70%. That means if you have a $1,000 limit on all your cards combined, you should aim to keep your balance under $700 in order to maintain good credit health. 


Managing your credit responsibly is essential to maintaining a good score. One key thing to be mindful of is the rate at which you open new accounts – it’s important to not open any more accounts than are necessary in a short period of time. Credit scoring models take into account how many new accounts you have opened and applied for; having too many can suggest that you may be taking on an excessive amount of debt, and thus, become a riskier borrower from the lender’s perspective which will lower your credit score. Being aware of this can help you steadily build credit without compromising your score.


Your payment history holds a lot of sway over how creditors view you and whether they’re willing to lend you money. If you make late payments or fail to pay back debt as agreed it will reflect poorly on your overall credit score and could lead to being declined for credit or higher interest rates in the future. In order for lenders to feel secure about lending money, they need assurance that you will be able to repay them in full and on time—if not, they may be hesitant to extend any credit in the first place.


The length of time that has passed since each line of credit was opened also plays an important role in determining your overall score. The longer you’ve been using different forms of loans responsibly, the more likely lenders are going to trust giving more money or offering more lenient terms—especially if there have been no blips in between then and now!  The longer you’ve had accounts open without any problems, the higher your score will be!

Having good knowledge about how different factors affect your overall credit profile and score can help empower young adults with their financial decisions. Understanding why something like payment history matters so much or why it can be beneficial for someone with shorter-term goals like buying a car, buying a house or financing an education is key! Ultimately, having good financial literacy skills can provide long-term benefits like lower interest rates on mortgages or better auto loan terms down the road – all because creditors know they can trust someone who understands how their actions affect their financial health! Taking control of our own finances is an essential life skill – understanding what affects our individual credit score is just one step toward achieving this goal! If you are ready to take the next step, give Chris Marriner a call to set up an appointment 403.894.8836

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