Six Surprising Things Students Need To Know About Their Credit Score

By RBC Modified on October 23, 2017

Understanding your score doesn't require you to be a genius.


Why is understanding your score so important? Because knowing what a credit score is, how it works and how to improve yours could save you a lot of money.

Over the course of your life you'll be more likely to qualify for better interest rates, which can mean paying lower fees on mortgages and other loans. Contrary to popular belief, understanding your credit score doesn't require you to be a genius. It does however, require that you understand a few things about credit and how it's calculated.

Here are 6 things you may not know about credit scores:

1. You Actually Have More Than One Credit Score

When you hear people talk about "your credit score," they usually speak as though you only have one. But that's wrong. Everyone actually has multiple credit scores. Canada has two credit bureaus, TransUnion and Equifax, each of which use slightly different methods to calculate a credit score based on your credit history. There are also other companies that calculate credit scores which banks or other lenders might use when assessing whether to lend to you.

2. The Golden 20-30 Rule

A large part of your credit score is calculated based on how much of your credit you're currently using. This is called your credit utilization ratio and if you want a high credit score, you typically should utilize just 20%-30% of your available credit. If you use more on any particular card or in total, then your credit score could be dinged. What if you pay your cards off every month? It doesn't matter - if you're charging more than 20%-30% of your limit then your credit utilization ratio isn't ideal.

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