what is a credit score? ...
There are two main companies in Canada that collect and rank or score financial histories for almost everyone in the country. If you have a bank account, are employed or have been, and have a utility bill, credit card, a loan or lease in your name - you will probably have a financial paper trail being gathered by these companies. They collect very detailed histories on your outstanding balances, payment histories, past bankruptcy, collections and settlement histories. This information is sifted, scored and risk assessment factors applied that then result in a numerical value that ranks you as a credit score. The methods used by each company are unique to them but the end result is a universal ranking used as a comparison to other people in the country. The scores are applied to a standard scale that allows lenders to quickly review, along with your loan application data, to determine if you will be approved for the loan. Naturally, good credit histories are easily approved, while complex cases may take a little longer to review. Below are some sample graphs supplied by Equifax relative to their FICO credit scores. As you can see, a lower score is routinely accompanied by a higher loan default or delinquency rate. This is why many lenders just will not lend to certain clients with FICO scores less than 700.
how are these used...
Every lender subscribes to and has access to the credit scores for clients who are applying for a loan. They will look at the credit history data, the overall score achieved, and your current application data that you submit, to determine the risk level the loan will represent, your overall credit worthiness and ability to repay the debt. Assuming this is all positive and within their range of risk comfort, they will grant the loan and specify a maximum loan value to which they are willing to release funds to you for the purchase of your car or truck. The lender will also determine the ranking (A, B or C) showing your overall risk level and interest rate with which they are willing to finance the loan.
Get your own credit score now from Equifax...
Click the appropriate button below and get your own credit score confidentially from Equifax Consumer services for a small fee:
You can apply for a loan any time, 24 hours per day. Our Special Finance managers will examine your request as soon as they get notified of your application. We can get you approved as early as the same day or usually within 24 hours of receiving your application during normal business hours.