FAQs

Approved

Your credit rating is an assessment of your ability to handle the financial burden of credit at a particular time. It is important to remember that your credit rating is dynamic. This means that it will change as your financial circumstances change.

While most financial institutions offer similar products and collect similar information during the approval process, credit granting policies will vary by product and from one credit grantor to the next.

Recognizing that everyone's financial situation is unique, here are some common reasons why applications are often declined:

1. History of missed or neglected payments

This will likely lead to a lower rating on your credit bureau and could be of particular impact if previous creditors were forced to write off a loss.

2. Inadequate proof of income

A T4 slip or a pay stub is generally required as minimum proof of income. Depending on the type of income you earn (for example, if you are self-employed or a contracted employee) and the type of loan you require, more information may be requested.

3. Lack of employment or income stability

Based on your employment history, it must appear reasonable that your income will continue into the future.

4. Insufficient income

Your total income must support your current liabilities and living expenses plus the additional credit you are applying for. If your income doesn't meet the requirement, you may be able to have your application co-signed by a relative or friend who does meet the criteria and who will agree to be liable for the debt if you fail to make the payments.

5. Lack of collateral

Depending on the type and size of the credit requested, you may be required to provide collateral of sufficient value to support the debt. For example, a personal mortgage or Home Equity Secured Line of Credit requires the security of a residential property.

6. Avoid using credit to pay off credit

Consolidating balances from several credit cards into a lower-rate loan may be a smart move to reduce your interest charges and lower your payments so that you can keep them current, as long as you don't continue to increase your debt load. But simply making payments on one credit card with funds drawn, for example, from another credit card does not necessarily improve your overall rating because it can be seen as an attempt to avoid paying off your debt. It's much better to focus on paying off the credit you have.

7. Ask for help

If you find yourself getting in over your head, Click here to go to our Credit Repair page.

Bankruptcy

Vehicles

Insurance

Not necessarily. People often think a 2-door car is sportier and thus more expensive to insure but insurance companies rate cars based on the claims history of that vehicle—not how many doors it has. They look at things like the car's accident frequency, repair costs, theft frequency, vandalism and safety ratings for each make and model. When these factors are combined, a 4-door could cost more to insure than a 2-door model.

Parking tickets do not count against your insurance, but unpaid fines could affect your ability to renew your driver's licence or worse result in a licence suspension—which will affect your rate.

That depends. Your first minor speeding ticket (typically defined as being less than 50 km/h over the speed limit) may not affect your insurance rate; it will depend on your insurer. But, get two or three and you'll probably be paying more to be insured. A major speeding ticket (usually 50 km/h or more over the speed limit) and your rates go up for sure.

False. Where you live is just one component that affects your rate; there are many others like your driving experience, insurance history, the number of drivers in your home, and the number and type of vehicles you drive.

Not necessarily. Auto insurance premiums are based on many factors including the car's accident frequency, repair costs, theft frequency, vandalism and safety ratings. When these factors are combined, a cheaper car could cost more to insure than a luxury model.

Unlikely. Where you live is one of the factors taken into consideration when determining your rate. When you move your premiums will likely change; for the lucky, it might mean paying less, for others, it might mean paying more.

True and false: It's true, but it won't be covered for long. Most policies require that you notify your insurer within three to seven days of picking up your new wheels. Be certain, notify your insurer before you pick up your new car to make sure you have the coverage you need.

This one confuses many people. A deductible is the portion of an insurance claim you agree to pay; your insurance company picks up the rest. As a result, the more you're willing to take on at the time of a claim, the less you'll have to pay in premiums. Translation: The higher your deductible, the lower your premium.

False. Too often, drivers think that only those with bad driving histories have to shop around. This is simply not true. Everyone, good drivers or bad, should shop around to make sure they're getting the best price for the coverage they need.

Highly unlikely. Auto insurance rates vary considerably from company to company. In fact, each insurer's car insurance rates are so unique to them that it's pretty safe to say that no two are alike.

The last myth proves why shopping around to compare quotes is time well spent. Shop around for car insurance quotes to make sure you are getting the coverage you need at the best available price.

Credit Rating

On your credit report in Canada, each creditor assigns you a credit score on a scale from 1 to 9. R1 is the best credit rating and R9 is the worst. Here are their meanings:
• R1 – You pay that creditor’s loan on time.
• R2 – Your payments are 30 days late.
• R3 – Your payments are 60 days late.
• R4 – Your payments are 90 days late.
• R5 – Your payments are 120 days late.
• R6 – Typically not used.
• R7 – You are in a consumer proposal, consolidation order, or debt management plan (offered through a non-profit credit counselor).
• R8 – It is used to show that a secured creditor has taken steps to realize on their secrity (e.g. repossessed your car).  It rarely appears on a credit bureau report as after they take your car they generally commence legal or collection action which is rated R9.
• R9 – A bad debt placed for collection or considered uncollectible, or you are bankrupt.

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