The first step in applying for a Canadian loan as an informed consumer is to know your credit score. Your current financial situation directly affects your ability to obtain a loan as well as partially dictate your financial freedom in the future. You must be prepared before you apply for a loan, and discovering your limitations and will predict what type of loan is realistic and right for you.
To more efficiently achieve success with your loan, it is important to know your credit or FICO score before you apply. The accuracy of your score is just as important as learning your score itself. Appropriate research will prevent any unwelcome surprises at application time as well as allow you to correct any errors that may effect your approval.
It is important to understand not only what your credit score is, but how it is calculated before actually acquiring it. Your credit score is a number derived from a pool of information consisting of bill payment history, how many and what type of accounts you have, any record of late payments, collection actions taken against you, the age of your accounts, and all your outstanding debt. Creditors then apply a statistical program to your information as well as the information of your financial peers. Your actual credit score number is then extracted from a system that awards points for each factor you have that helps
predict your likeliness to repay any loan or credit given in a timely manner. Through this system, the more points you are awarded, the better your score and the better your probability of receiving approval.
There are three major credit-reporting agencies through which you can access your credit information. They are known as Equifax, Trans Union and Experian. Because not every agency carries identical reports, it is important to
obtain a copy from each one. As stated before, accuracy is imperative.
In recent years, more and more lenders are relying on something called a FICO score whenever you apply for a loan. Your FICO score is a number that is mathematically generated based upon your credit report. This number is then compared to millions of other people. This result very accurately predicts how likely you are to pay your bills. The higher your FICO score, the more likely you are to get a loan approval.