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What does a 700 Credit Score Mean in Canada?

Written by Jessica Steer
In Canada, your ability to borrow money or make large purchases is partially based on your credit score. Your credit score is based on your credit history, credit utilization, debt-to-income ratio, any collections or bankruptcies as well as how many credit tradelines you have on your credit report and how many credit accounts you have on your credit report. While many people think it’s how much money you have that dictates your purchases, it's actually a smaller piece of the puzzle than you would think.
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    While you do need money to structure your debt properly, you are better off structuring your debt in a way that increases your credit score than paying off your debt altogether. 

    What is the maximum credit score in Canada?

    Credit scores in Canada range anywhere from 300-900 with 900 being the highest. In these ranges, credit scores are then split into categories. 

    760-900 Excellent
    725-759 Very Good
    660-724 Good
    560-659 Fair
    300-559 Poor

    When you are going over your credit score, it is important to remember that there are two types of credit checks: 

    • Soft credit check: this type of credit check gives a general overview of your credit report and an indication of your credit score that is correct within 100 points. This is used to get an idea of the overall credit score and is only usually a preliminary check. It doesn’t affect your credit score at all. 

    • Hard credit check: this type of credit check does affect your credit score. Each check drops your score by 5-15 points and is usually only done once a pre-approval has been made with the soft check. Hard credit checks will provide a detailed report of credit history as well as an accurate credit score. 

    What is a perfect credit score?

    Having a maximum credit rating of 900 is considered to be a perfect score. While this is hard to maintain, if you achieve an average credit score between 760-900 you are seen to have excellent credit and have a lot of the same opportunities available to you, credit-wise. This shows lenders that you don’t borrow more money than you can handle and keep your credit utilization low. It also lets them know they can trust you, so you pay much less in interest. 

    Is a credit score of 700 good?

    As you can see above, if your credit score falls into the 700 range then you are considered to have good credit. This basically means you have a better chance of getting approved for loans and credit cards at a lower interest rate. While this is only one portion of what banks, credit unions, and other lenders look at when receiving a loan application, it gives them a good idea of your trustworthiness with money. 

    How much can you borrow with a 700 credit score?

    While a 700 credit score does mean you are likely to get approved for a loan, the main deciding factor on how much you can get approved for is your debt-to-income ratio. Your ratio is based on how much you earn and how much you are required to spend every month on certain bills like rent and minimum debt payments. 

    When looking at your debt-to-income ratio, lenders will decide on an amount where your monthly loan payment keeps you under 45%-50% of your monthly income spending. They recognize that having a ratio over this amount could lead to a default on your payments since they know that you have other monthly expenses than the ones that they have to include. 

    Another thing lenders look at that tires in with your credit score and your credit reports, is your credit utilization ratio. This means that they look to see if you max out your credit limits or if you are able to keep a good credit utilization rate, ideally under 35%. A credit score of 700, which is in the good credit range, indicates to the lender that you are more responsible when it comes to credit utilization. 

    To a lender, your credit score indicates how likely you are to pay back the amount that you are borrowing, so the higher your credit score the lower your interest payments are. So, with a 700 credit score, you may increase the amount of money you can get approved for since the lower interest rate leaves more room for the principal amount to be higher. This means that because you can only handle a certain monthly payment, a lower interest rate allows for more money to be put directly to your principal amount borrowed, leaving the lender room to give you a higher amount than someone with the same debt-to-income ratio but a lower credit score. 

    How do you find out your credit score?

    In order to check your credit score in Canada, you actually have a few different options. 

    Free Credit Apps

    The first way you can check your credit score is to use apps like Credit Karma, Borrowell, or any of the many others available. How it works is you enter your information into these apps, and they will give you a soft credit score. This is basically a rough estimate that is usually correct within 100 points. While it may not be the most accurate, if you check your score often, you will be able to track whether your score is increasing or declining and by how much. The app you choose will depend on if you are checking your Transunion or Equifax score. 

    Banks or Credit Unions

    Many banks and lenders give their customers the option to see a copy of their free credit score when they log in to mobile banking. Keep in mind that there are 2 main credit bureaus so some will give you an Equifax score, while others use Transunion. Again, checking your credit this way will give you a good indication of what direction your credit is going and by how much. These also won’t be 100% because they are not hard credit checks. 

    When you apply for a new credit account

    Quite often when you apply for a new credit account/tradeline, the lender you have applied with will fill you in on your current credit score whether you are approved or not. This is a pretty accurate representation of your current credit score since it is a hard credit check. 

    The lender will then usually go over the credit report with you in detail. You may notice there may be something missing or an account that should have been taken off. You can then contact the credit bureaus to get any issues resolved. Just like the other ways to check your credit, it is likely the lender will only check one credit bureau. 

    If this is the case, you are able to use another method to check your other credit score. It is important to remember though, to keep your hard checks to 5 or fewer per year since you do get hit anywhere between 5 and 15 points for each check. 

    Credit Bureau

    Lastly, you can get your credit score directly from the credit bureaus. Once per year, you can request a free hard credit cheque from each credit bureau. While this isn’t necessary, it is a great way to keep track of your credit score if you are actively trying to increase with a goal in mind. Otherwise, checking with soft credit checks is also a good idea. Just like the credit score apps, the credit bureaus update a soft credit check monthly that you can see on their website. 

    Can you buy a house with a 700 credit score?

    Yes, you can. In Canada, as a first-time home buyer and/or are putting down a down payment of less than 20% you must get CMHC (Canada Mortgage and Housing Corporation) insurance. They require a minimum of a 680 credit score, so a credit score gets you within these guidelines. 

    Even if you don’t need to qualify for CMHC insurance, banks still prefer a minimum credit score of 600. You may be approved for lower, but don’t forget that this could heavily influence your interest rates. The higher the interest rate the lower the mortgage that you could get approved for. 

    All in all, in order to get a mortgage, it is recommended to have a least a credit score of 700 or higher. This will give the bank confidence that you can pay your mortgage but also allows for a reasonable interest rate. 

    What can a credit score of 700 get you?

    Overall, having a credit score of at least 700 can get you approved for most financial products. This makes you an average risk borrower. While it is better to have a very good credit score or even an excellent credit score, having a good credit score gives you the opportunity to build your credit report and increase your credit score even more. The funny thing with credit is you need to obtain more credit in order to build it. Being able to have a credit score of at least 700 allows you to get approved for personal loans, car loans, lines of credit, mortgages, and even credit cards. Just keep in mind to diversify your report by getting a personal loan or line of credit instead of obtaining too many credit cards. 

    Having a credit score of 700 can also get you more than just a loan. Many phone companies will check your credit in order to get the latest phone that allows you to pay your tab monthly. Having a good credit score will make a big difference over having a fair credit score. 

    Another thing that a good credit score will affect, is a job or promotion. Many companies will require a credit check done before they complete the hiring process. Having a bad credit score can indicate that you are financially irresponsible and therefore affect their ability to rely on you and how you conduct your organizational skills. While this isn’t always the case, they don’t know much about you and need proof to justify the investment that they are about to make. 

    Landlords will also often require a credit check to approve your rental application. Having a credit score of at least 700 indicates to them that you prioritize your bills to the best of your ability, and they can rely on you to make your rent on time. 

    How rare is a 700 credit score?

    Well, a 700 credit score is actually pretty normal. The average Canadian credit score falls between 650 and 725. This is actually a good sign. It means that most people are financially responsible or are actively building their credit scores.

    Can you get a loan with Spring Financial with a 700 credit score?

    While having a credit score of at least 700 can make a big difference when getting a loan with a bank or credit union, it can make a difference with any lender. While Spring Financial specializes in personal loans for those with any credit score, having a higher credit score increases your odds of getting the best interest rates and a higher approval amount. Just like any other lenders, we take all factors into account but if you need money, we can help!

    We offer personal loans that range from $500 to $35,000 and we report to both credit bureaus (TransUnion and Equifax) every month. Not only are you more likely to get a higher amount at a lower interest rate, but you are able to build your credit score at the same time. 

    To get a personal loan with Spring Financial, it’s as easy as filling out our online application in just 3 minutes and you could get approved as soon as today. Once you have gotten an approval amount, you could receive the money in as little as a few hours through e transfer. You can also give us a call at 1-888-781-8439.

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