One of the most positive personal-finance developments of the past couple of years is how easy it’s getting to check your credit score, which is what lenders look at when assessing you as a borrower.

Maintaining a decent credit score – you don’t need to hit it out of the park – ensures you’ll get competitive interest rates when borrowing to buy a house, a car and more. But what, exactly, goes into a good credit score? A non-profit credit counselling agency has provided some useful answers based on information from the credit-monitoring company Equifax.

There are five factors affecting your credit score. About 35 per cent of the overall tally is your payment history, or your record in paying what you owe on time. Another 30 per cent is credit utilization, or the percentage of your available credit that you’re actually using. Fifteen per cent of your score is influenced by how long a credit history you have, and 10 per cent is tied to the types of borrowing you’re doing. More weight is given to credit cards than, say, a car loan or cellphone bill. A final 10 per cent is tied to hard inquiries, where lenders size you up when requesting new credit (checking your own credit details does not affect your score).

Credit scores range from 300 to 900. Here’s Equifax on what your credit score says about you: “Credit scores from 580 to 669 are generally considered fair; 700 to 749 is considered good; and 750 and up is considered excellent.”

Banks that offer their clients no-cost access to their credit scores include Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada and Capital One, which is a credit-card issuer. You can also use services like Credit Kharma (they suggest financial products that might of interest) and (online lending).

The Globe and Mail, December 13, 2018