6.4: Establishing and Maintaining a Good Credit Rating

6.4: Establishing and Maintaining a Good Credit Rating

Open Ended

How do you thinks a lender (like a bank) determines whether they should lend you money or not?

Credit Ratings

• How does a lender, like a bank, find out if they should loan you the money you need?

• All of the types of credit that you may use - credit cards, car loans, personal loans, mortgage, lines of credit - become a part of your credit history. 

• An agency will give you a credit score that tells the bank whether or not they should lend you the money.

• The higher your score, the better!

• These agencies will provide the lender with your credit score and your credit history.

  
  

Credit report and score basics - Canada.ca

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Your _______ report is a summary of your credit history.

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Your __________ score is a three-digit number that comes from the information in your credit report. It shows how well you manage credit and how risky it would be for a lender to lend you money.

Multiple Choice

What happens to your credit score if you use your credit responsibly?

• You get points

• You lose points

Multiple Choice

What happens to your credit score if you have trouble managing your credit?

• You get points

• You lose points

Multiple Choice

Do credit bureaus and lenders share the exact formula they use to calculate credit scores?

• yes

• no

Multiple Select

Which of the following factors may affect your credit score? (select all that apply)

• how long you’ve had credit

• if you regularly miss payments

• the amount of your outstanding debts

• being close to, at or above your credit limit

• the number of recent credit applications

Open Ended

What are the two main credit bureaus in Canada?

Multiple Select

Which agencies are allowed to see your credit report? (select all that apply)

• banks, credit unions and other financial institutions

• credit card companies

• mobile phone companies

• employers

• landlords

Open Ended

Businesses or individuals use your credit report to help them make decisions about you. List 3 decisions that could be made depending on your credit report.

Multiple Choice

Lenders may be concerned if there are too many credit checks, or inquiries in your credit report. Why is this?

• It can seem like you are urgently seeking credit.

• It may indicate that you are living beyond your means.

• All of the above

Multiple Select

What are some other accounts that may be included in a credit report? (select all that apply)

• mobile phone and internet provider account info

• mortgage information

• home equity line of credit (HELOC)

• loans between family members or friends

Multiple Choice

Why does your credit history matter?

• Lenders use this info to determine whether they will give you a loan or not

• It may be used to determine the interest rate you are charged to borrow

• It could affect your ability to rent a house or apartment

• It may affect whether you get a job

• All of the above

Getting Help With Borrowing Decisions

• Financial institutions like banks are businesses and when banks provide loans, they are selling a service.

• To make the most money, they would like to lend you the most amount of money that you will be able to repay over the longest period of time with the highest possible interest rate.

• How does this match up with your needs?

Open Ended

What should your goal be when borrowing money?

Open Ended

What steps can you take to ensure you are getting the best deal on a loan?

Open Ended

What resources can you use to help you make the best borrowing decisions for you?

Open Ended

What factors should you think about before taking out a loan?

Homework

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