Personal Credit Cards

Understanding Credit Scores

Your credit score: that mysterious three-digit number that seems to hold the keys to your financial kingdom. At Prosperity Credit Union, we know it can feel a bit like your report card from adulthood—but without gold star stickers. Don't worry, we're here to break it down and make sense of it all!
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PE
Prosperity Expert
Prosperity Team

What Is a Credit Score, Anyway?

Think of your credit score as a financial snapshot. It tells lenders how trustworthy you are when it comes to borrowing money and paying it back. The higher your score, the more likely lenders are to roll out the welcome mat with better loan rates and credit options.

In Canada, credit scores range from 300 to 900. A higher score means you’re a superstar borrower, while a lower score might mean you’ve hit a few bumps along the way—and that's okay! Life happens, and we're here to help.

What Affects Your Credit Score?

Here are the five biggies that shape your credit score:

  1. Payment History (35%): Paying your bills on time is a big deal. Late payments can drag your score down faster than a prairie windstorm.
  2. Credit Utilization (30%): This is how much of your available credit you're using. Maxing out your credit cards isn't ideal—aim to keep your balance below 30% of your limit.
  3. Credit History Length (15%): The longer you've had credit accounts open, the better. So, that old credit card you barely use? It might be worth keeping.
  4. Types of Credit (10%): A mix of credit (like a car loan, credit card, and mortgage) can show you're responsible with different kinds of borrowing.
  5. Credit Inquiries (10%): Each time you apply for new credit, it leaves a mark. Too many applications in a short time can make lenders a little jittery

Why Does Your Credit Score Matter?

A good credit score can open doors to better interest rates, easier loan approvals, and even help you snag that dream home. Plus, having a solid credit score gives you peace of mind knowing you’re in good financial shape—and who doesn't want that?

Tips to Boost Your Credit Score

  • Pay On Time, Every Time: Set up reminders or automatic payments to keep things on track.
  • Keep Balances Low: Try not to max out your credit cards. Your score will thank you.
  • Limit New Credit Applications: Only apply for credit when you really need it.
  • Check Your Credit Report: Mistakes happen! Review your report regularly to catch any errors. We recommend you check your report annually through TransUnion or Equifax.

At Prosperity Credit Union, we’re here to help you navigate the world of credit with confidence. Whether you're just starting out or working to improve your score, our team is ready with advice, support, and maybe even a coffee if you stop by one of our branches. After all, we’re not just a credit union, we’re your neighbours.