Credit library

Learn more about credit scores, credit building, debt and financial management.

How are credit scores calculated?

Credit scores are calculated using a variety of factors from your credit report, including payment history, credit utilization, length of credit history, types of credit, and recent credit inquiries. A higher score indicates a lower risk of defaulting on credit accounts, while a lower score suggests a higher risk.

Why does a credit score matter?

A good credit score can help you in many ways. For example, it can make it easier for you to qualify for loans and credit cards, and it can also help you get lower interest rates and better terms on those loans and credit cards. A good credit score can also make it easier for you to rent an apartment or get a job, as many employers and landlords check credit scores as part of their application process.

On the other hand, a poor credit score can make it more difficult for you to get approved for loans and credit cards, and you may end up paying higher interest rates and fees. A poor credit score can also make it more difficult to rent an apartment or get a job, as landlords and employers may view you as a higher risk.

What impacts my credit score?

1. Payment history: This factor considers whether you've made on-time payments on your credit accounts, and whether you've had any late or missed payments.

2. Credit utilization: This factor looks at how much of your available credit you're using, and whether you're keeping your balances low.

3. Length of credit history: This factor considers how long you've had credit accounts and how often you use them.

4. Types of credit: This factor considers the types of credit accounts you have, such as credit cards, loans, or mortgages.

5. Recent credit inquiries: This factor looks at how many new credit applications you've made recently.

6. Adverse credit events: This includes things like bankruptcies, foreclosures, collections, and other negative marks on your credit report.

7. Public records: This includes collections, legal judgments, tax liens, and other public records that may impact your creditworthiness.

Will applying for credit impact my credit score?

Yes, applying for credit can impact your credit score. When you apply for credit, the lender will typically perform a hard inquiry on your credit report, which can lower your credit score by a few points.

How do I build credit?

To build credit, you to get access to a credit card or financial product which reports to the credit bureau, and make on-time payments over time, and be patient over time to establish a positive credit history and improve your credit score.

Note not all lenders report credit, but not paying a loan can still adversely affect your credit if your file is sent to collections.

Can I build credit if I have no credit or little credit history?

Yes, it is possible to build credit with no credit as long as you can get access to a financial product that will report your payment history to the credit bureaus.

How long does it take to build credit?

Typically, it takes at least six months to establish a credit history and up to two years to see a noticeable improvement in your credit score. However, it can take longer to achieve an excellent credit score. It is important to be patient and make responsible credit decisions to build and maintain good credit over time.

Can I build credit if I have bad credit?

Yes, it is possible to build credit even if you have bad credit. However if you have declared bankruptcy or are in consumer proposal, it may take much longer and you may need to exit the consumer proposal or bankruptcy to building credit again.

What causes bad credit?

Bad credit can result from missed or late payments, high credit utilization, a short credit history, new credit applications, negative marks on credit report, and hard credit inquiries.

Why has my credit score dropped?

Credit scores can drop due to various reasons, including:

1. Late or missed payments on credit accounts
2. High credit utilization, or using a large percentage of your available credit
3. Closing a credit account, which can decrease your available credit
4. Applying for new credit accounts, which can result in hard inquiries on your credit report
5. Negative marks on your credit report, such as collections, foreclosures, or bankruptcy
6. Inaccuracies on your credit report, such as errors in personal information or credit account details.

It's important to monitor your credit score regularly and take steps to address any issues that may cause it to drop. This can include paying bills on time, keeping credit balances low, disputing inaccuracies on your credit report, and avoiding unnecessary new credit applications.

How does consumer proposal or bankruptcy affect my credit score?

When you file a consumer proposal or declare bankruptcy, it will be noted on your credit report and will remain there for several years.

The exact impact on your credit score will depend on a variety of factors, such as your credit history prior to filing, the amount of debt involved, and how recently the filing occurred. Generally, a consumer proposal will have less of an impact on your credit score than bankruptcy, but both can result in a significant decrease in your credit score.

how does identity theft affect my credit score?

Identity theft can have a serious negative impact on your credit score. When someone steals your identity, they may use your personal information to open new credit accounts, make purchases, or take out loans in your name, without your knowledge or consent.

This can result in late payments, defaulting on loans, and other negative marks on your credit report.If you become a victim of identity theft, it's important to take immediate action to report the fraud and protect your credit.

If you notice any unauthorized accounts or other suspicious activity, you should dispute the information with the credit bureau to have it removed from your report.It's important to act quickly to address any issues related to identity theft, as the longer you wait, the more damage it can cause to your credit score and overall financial health.

A Nyble membership includes digital identity protection, which may help you protect against identity theft and help cover you in the event that this happens.

How do I get a credit card or loan?

To get a credit card or loan, you should check your credit report, compare offers from different lenders, apply for credit by providing your income, employment, and credit history, and wait for approval. It's important to use credit responsibly and make on-time payments to maintain a good credit score and avoid high interest charges and fees.

Why should I care about interest?

Compounding interest can be scary because it can quickly cause your debt to grow, making it more difficult to pay off over time. Compounding interest is when interest is added to your principal balance, and then interest is charged on the new total (principal + interest). This means that the interest you owe can start to accumulate and build upon itself, leading to a snowball effect that can be hard to reverse.

Therefore, it's important to consider the interest rate and fees associated with any credit or loan before you borrow, and to look for ways to minimize the amount of interest you'll have to pay over time.

What happens if I don't repay a loan?

Not repaying a loan can lead to serious consequences, such as late fees and penalties, damage to your credit score, collection calls and legal action, repossession or foreclosure, and difficulty getting credit in the future.

What is a overdraft and an overdraft (NSF) fee?

An overdraft occurs when you spend more money than you have available in your checking account. This typically happens when your balance is low and your account becomes overdrawn.

An overdraft (NSF) fee, on the other hand, is charged when you do not have enough money in your account to cover a transaction and your bank declines the transaction. It can be extremely expensive as NSF fees are usually $45-$50 per occurence.

It is important to keep track of your account balance and avoid overdrafts and NSF fees whenever possible by monitoring your spending and balancing your account regularly.