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This video gives a visual representation to help explain how credit rating works by using the pink and blue buildings as representation. Offering a play-by-play illustration of the credit rating process and concludes by showing you how to monitor and check your credit rating.

I chose this video because I think that the visual indicators, represented by the pink and blue buildings, help the viewer get a demonstration of what a credit rating is and what is involved in a credit assessment process. It also provides assistance at the end by explaining how to keep up with your credit rating.

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This video indicates the impact numerous factors may have on your credit rating and it may affect the way lenders perceive you. Determining how likely you are to repay your debts, what you already have on your current account and how long it has been on there are a huge factors that lenders take into consideration when determining a credit card, loan, vehicle rental, and more.

This video not only explains in great detail the effect credit ratings have on an individual but it also indicates the effect credit ratings have on our economy overall by using illustrations to help provide a clear understanding.

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Our credit ratings have shown strong performance over time as effective measures of relative creditworthiness: Our studies have shown that the higher the ratings, the lower the default rates, and vice-versa. For example, our historical statistics show a 3-year cumulative default rate for a 'BBB' rated company of 0.91%, vs 4.17% for a 'BB' rated one, 12.41% for a 'B' rated one and 45.67% for a 'CCC/CC' rated one.

Credit ratings are designed to be dynamic, and evolve to reflect changes to market conditions or issuer-specific credit factors. They are not designed to be static. We change ratings if and when our view of credit risk changes. We do this based on our analysis of relevant information, and in line with our published methodologies. Because ratings evolve over time to reflect economic and market developments or issuer-specific credit drivers, they are seen to provide valuable opinions about current credit risk.

Driven by lessons learned from the financial crisis and new regulations introduced around the world, we invested heavily to further the quality, transparency, and integrity of our ratings. We emerged as a stronger organization and encourage you to read on for additional detail on both actions S&P Global Ratings has taken and the significant regulatory changes made globally.

S&P Global Ratings uses the issuer-pays business model. Under this model, rating agencies charge issuers for providing a rating. The model promotes transparency by allowing ratings to be released publicly free of charge- meaning they're scrutinized every day by all corners of the market, the media, and academia. It also provides rating agencies with access to high-quality information from issuers that might not otherwise be available and enhances the quality of analysis.

We have safeguards to identify and manage potential conflicts of interests, from which no business model is immune. For example, we clearly separate our commercial and analytical functions, and restrict communications between sales personnel and ratings analysts. We comply with regulations around the globe, which impose strict rules on how we manage and disclose any conflicts.

Credit ratings are one of several inputs investors (e.g., portfolio managers and analysts at mutual funds, pension funds, insurance companies, and university endowments, etc.) may use in their decision-making process. Other factors could include, for example, analyzing the issuer's financial statements and SEC filings, meeting with company management, reviewing sell side analyst reports, conducting proprietary research, and building financial models. Credit ratings add to the mix of inputs available to investors' objective, independent, forward-looking assessments on an ongoing basis of the relative likelihood of whether an issuer may repay its debts on time and in full. Credit ratings do not speak to investment merits.

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Credit ratings are forward-looking opinions that provide relative rankings of overall creditworthiness. While not a guarantee or absolute measure, they can be a useful tool for investors in the decision-making process.

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This video demonstrates a five-step process to improve your credit rating. Including order your credit report, dispute inaccurate information, bring all account current, pay your bills on time, pay down debts. It provides an outlined overview to offer actionable insights to aid an individual’s journey to credit improvement.

This video is an immensely helpful guide that helps illustrate what a credit rating is. It provides detailed instruction on how to accomplish each step effectively and emphasizes how crucial these steps are in order to enhance your rating. As long as these steps are followed with consistency, evidently you should start to see improvement in your credit rating. A practical guide to success.

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Five Steps to Improve Your Credit Rating

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This website provides a clear understanding of the credit landscape catering to individuals with varying levels of knowledge regarding financial situations. It distinguishes credit ratings apart from credit scores to offer clarity. The rating system provided a clear understanding of which each letter represents and how it correlates to the individual’s financial status.

The thorough information and knowledge provided is the key reason I chose this website. It provides a clear understanding of the ten different R-ratings to share practical insights of how various circumstances can affect one’s credit standing. It equips people with the knowledge to help them have better financial health.

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Website 2 - Key Differences of Credit Rating vs Credit Score

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Website 2 - Key Differences of Credit Rating vs Credit Score

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The website has a proficient explanation of the differences between a credit rating and a credit score. It debriefs the intricacies of both rating systems and breaks down the differences in characteristics and how they differ from one another. It clarifies the distinction of what constitutes good or bad credit within each rating system and helps provide you with a better understanding of your financial standing.

This website is very user-friendly and helps provide an easy understanding on credit ratings by supplying the key differences in a chart side by side in order to compare. It is a great comparison chart to be able to reference back to.

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We all know a good credit score can help us get further in life―for example, when purchasing your first house or buying a new car. But how many of us actually know our credit score?

Not as many as you'd think!

In fact, 25% of Canadians surveyed in 2018 had never checked their credit score before (Equifax Canada). Are you one of them?

There is lots of misleading information out there about credit scores and credit ratings, so we're going to clear things up for you. From understanding the difference between a credit rating and a credit score to debunking common myths our counsellors hear, we want you to walk away feeling confident and credit savvy.

Credit rating vs. credit score

Determined by independent third parties, credit ratings and credit scores help potential lenders and creditors understand your financial history and ability to repay debt. Credit card companies, car dealerships, mortgage lenders and even phone providers will look at your credit history to help them decide whether they want to do business with you.

But there are some key differences between the two:

Credit ratings reflect nothing more than the payment history for each individual debt. Credit ratings are expressed on a scale from RO (meaning the debt is too new to rate) to R9 (meaning you either have bad debt, are placed for collection or declared bankruptcy). A letter is assigned to each credit rating describing the type of credit being used: "I" for installment (e.g. a car loan), "O" for open (e.g. a cell phone) and "R" for revolving (e.g. a credit card).

A credit score is the number between 300-900 that provides an overall view of an individual's likelihood of repaying a loan based on past financial history and determines your creditworthiness. Credit scores are calculated by two Canadian credit bureaus: Equifax and TransUnion. The credit rating is one factor of about five that goes into determining the credit score. Refer to our free online course, Credit Cross-Training, for further information.

Common credit myths

Myth #1: You can only check your credit score for free once a year.

You can actually pull your credit report from each credit bureau (Equifax and TransUnion) once per year for free by mail or phone. This only gives you access to the debts that are listed on your report and their ratings. Getting your credit score requires paying an additional fee. Services such as Credit Karma and Borrowell provide free access to your credit score, drawing on information from the credit bureaus, and provide a good ballpark idea of what your score is. However, it should be noted that these third-party services don't always provide the full picture and can sometimes worry Albertans for no reason. The most reliable way to know your score is by ordering it from the credit bureaus directly.

Myth #2: Debt management programs (OPD, bankruptcy and consumer proposal) permanently ruins your credit score.

Legislated debt management programs limit access to credit for several years, but they do not permanently ruin someone's credit score. You can always rebuild your score! In an Orderly Payment of Debts (OPD) program and consumer proposal, the program is on the credit report during the repayment period (usually five years or less). During this time, it will not be possible to get credit. OPD remains on the credit report for two years after the debts are paid off, while a consumer proposal remains on the report for three years after paying off the debts. It is possible to get credit after the debt is paid off, even if the program is still reporting on the credit report, but creditors may place additional conditions on it, such as higher down payments, higher interest rates and/or the debt being joint or co-signed. In a first bankruptcy, the debtor is under court ordered bankruptcy protection for 9 or 21 months, depending on the debtor's income. It won't be possible to get credit during that time. After the conditions of the bankruptcy have been met, the debts are "discharged," and the bankruptcy is on the credit report for six or seven years depending on which province you live in. It will be very difficult getting credit for at least two years after a bankruptcy is discharged. A secured credit card is a common way to start rebuilding credit. Having said that, it's not unheard of for clients to get lines of credit, car loans and even mortgages while any of the above programs are still on the credit report AFTER all the debt has been paid, though additional conditions will likely be applied. Once the above programs come off your credit report, you have a fresh start and can continue to rebuild your credit score moving forward.

Myth #3: Checking your credit score will negatively affect it.

This one's tricky! According to Equifax, "While pulling your own credit report does result in a 'soft' inquiry on your credit reports, it will not affect your credit scores. In fact, knowing what information is in your credit reports and checking them regularly may help you get in the habit of monitoring your financial accounts." On the other hand, "hard inquiries" do affect a credit score. The Equifax website says, "When a lender or company makes a request to review your credit reports as part of the loan application process, that request is recorded on your credit reports as a hard inquiry, and it usually will impact your credit scores." The reason for this is that the credit bureaus regard multiple credit inquiries in a short period of time as increasing the likelihood that a borrower is carrying a lot of debt. Borrowers who carry a lot of debt are seen as "risky" in terms of their ability to repay the debt. Credit bureaus identify those potentially risky borrowers by lowering their credit score. Having said that, most people can have their credit report pulled three or four times per year without negatively affecting their credit score. An exception to the above practice is when you are shopping around for a major purchase like a car or mortgage. Again, according to Equifax, "multiple inquires for the same purpose within a certain period of time (usually 14-45 days) are generally counted as one inquiry."

Myth #4: Closing a credit card account will affect your credit score.

This is possible in a couple ways. First, closing a credit card affects " credit utilization." Credit utilization is the percent of total available credit that you're currently using. When you close a credit card, the available credit drops, which means your percent of available credit used increases. Higher credit utilization levels can negatively affect your credit score. To limit this impact, either close lower limit cards and keep higher limit cards or request an increased limit on the remaining cards to offset the reduced credit that's available when a card is closed. Second, if you close a card that you've had for awhile, it could negatively affect credit history over time. The reason for this is that the closed card would stay on your credit report for several years after closing it. Eventually it drops off, leaving cards that you haven't had as long. At that point, your credit history would appear shorter than is actually the case. People with shorter credit histories are generally considered higher risk borrowers, which could cause the credit score to fall a little. To limit this impact, try to keep your oldest cards open while closing newer cards instead.

Myth #5: Spouses share credit reports. Anything one person does affects the rating/score of the spouse.

A spouse's debt, whether acquired before or during the marriage, does not affect the other spouse's credit unless the debt is joint, co-signed or one spouse is made an authorized user of the other spouse's credit card or line of credit. While solely owned debt doesn't directly impact a spouse, the poor credit of one spouse can indirectly affect the other spouse by impacting their ability to get joint debt like mortgages or car loans.

Myth #6: Each person only has one credit score.

There are two credit bureaus in Canada: Equifax and TransUnion. Some creditors report to one bureau and not the other, so each bureau may have different information on any one individual. Each bureau also uses their own calculations and algorithms to calculate a credit score. As a result, the same individual may have a different credit score at each credit bureau.

Myth #7: Paying my utilities bills on time will improve my credit.

Unfortunately, this isn't the case. Utilities and most cable/Internet providers (Enmax, Epcor, Direct Energy, Shaw, Telus, etc.) do not report payment histories to the credit bureaus unless payments are in default. If payments are up to date, they will not influence your credit score. If payments get behind or go to collections, they can be reported and will have a negative affect on the credit score. One exception to this appears to be Rogers Cable, which some have said are reporting to the bureaus regularly. Cell phone companies also report payment histories to the credit bureaus, so keeping your cell phone payments current can help to improve your credit score.

Educate yourself

There's always more to learn when it comes to credit ratings and credit scores. We offer a free online course, Credit Cross-Training, to help Albertans learn how to organize their current finances, plan for their application, understand credit reports, build credibility, research the best credit options for their unique situation, understand what creditors look for, and be a wise credit user.

We also offer another free online course, Credit & Lending 101, which is designed to help Albertans understand what factors are taken into account when reviewing a credit application.

(Don't forget that by successfully completing either of these free online courses you'll be automatically entered into our monthly $500 Incentive Program draw!)

Lastly, learn how to rebuild your credit step-by-step and get your financial affairs in order with our free Credit Comeback workbook.

Talk to a professional

Have any other questions or concerns about your credit? Our accredited, experienced counsellors are only a phone call or email away! They'll walk you through your current finances, answer any questions you may have and help you figure out a Money Action Plan. Book an appointment today!

Have questions?

Need more information or want to talk to an accredited financial counsellor for peace of mind? Let us help.
Call 1-888-294-0076 or book an appointment. It's free for all Albertans.

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7 Myths About Credit Ratings & Credit Scores in Canada | Money Mentors

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Misleading information about your credit score and credit rating is everywhere, so we asked our counsellors to debunk 7 common credit myths. Get the facts!

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This website explains which information is retained on your credit file and the long-term effects your credit rating can have. Your credit rating can affect you in various aspects of your life. For example, from loan applications, job searches, renting a vehicle, or pursuit of rental housing.

The best part about this website is that it outlines the necessary information needed and provides practical tips to enhance your credit rating. By providing knowledge and tips, it helps the reader understand what their credit rating is and how it may come with consequences, but also provides them with the tools to navigate their way to a better financial standing.

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Your credit file contains information on all of your credit accounts submitted to the credit bureaus, including balances, limits, payment history, etc, as well as identification information such as your name, address, age, social insurance number, marital status, spouse's name and age, number of dependents, occupation, and employment history.

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This website provides a 5-step guide to improve your financial well-being. It supplies a thorough overview of each necessary step by explaining why each step is important but also provides ways you can implement them.

By utilizing the step-by-step method, it helps prevent the users from feeling overwhelmed by the information provided. This website is a valuable tool to help users understand that your financial rating will not change overnight and that it is a gradual process that needs constant work. But, if you are willing to follow the steps provided, it can guide you in the right direction to better financial health.

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Your credit rating may be just a number, but it's a number that carries some power. When you apply for any type of credit, including a mortgage, car loan, or credit card, the lender will immediately look at your credit rating. This rating determines how much of a risk you are to lenders based on your repayment history and overall debt load. A bad credit rating can result in higher interest rates or being denied credit altogether.

If your credit rating is low, these steps can help you improve your credit rating:

Step One-Order your credit report.

Before you can improve your credit rating, you need to get a copy of your credit report. Canada has two major credit reporting agencies- Equifax and TransUnion. You can order a copy of your reports from each agency by mail for free, or online for a fee.

Step Two-Dispute inaccurate information.

Once you get your credit reports from both agencies, look over each account carefully. Errors in credit reports are common - one report from the Public Interest Advocacy Centre found that 18% of people surveyed found at least one error in their credit report. Things to look for include:

Accounts you aren't responsible for

Accounts that were inaccurately reported as late

Accounts more than seven years old that should no longer be reported

If you find inaccuracies, follow the dispute process outlined on Equifax and TransUnion's websites. By law, they are required to investigate all disputes. Accounts that can't be verified will be deleted from your report.

Step Three-Bring all accounts current.

Accounts are reported to the credit reporting agencies every month. Each month you fail to pay the required payment, it brings your credit rating down. If you have accounts that are behind, the first place to start in improving your credit rating is to get them up to date. Try working with your creditors to bring them current through a revised payment plan.

Step Four - Pay your bills on time.

Improving your credit rating takes time. While removing inaccurate information can cause your credit score to improve quickly, the majority of the time, improvement is slow and steady and comes after you consistently pay your bills on time. The older a late payment or negative mark on your credit report is, the less of an impact it will have on your overall score.

Step Five - Avoid constantly applying for new credit cards.

I've read some debt counselling articles that suggest that you take advantage of "no interest" deals on the first few months of a credit card, then switch to a different card for a new deal when the first expires, continuing this from card to card. This eventually leads to a good number of refusals. While it is good to try to use credit cards with lower interest rates, it is not a good idea to use this revolving credit card scheme. One of the things a prospective lender will look at, is the number of times you have applied for new cards, and how often you have been refused. They will be suspicious that you don't have a good handle on your spending if you need so many credit cards.

Step Five-Pay down debt

Your overall amount of available credit also affects your credit rating. If all of your credit cards and accounts are at their limit or close to it, your credit rating will be lower. To improve your credit rating, you need to start paying down your accounts and avoid running up new credit.

A poor credit rating can be costly. While following these steps can help you get your credit back on track, if you have multiple accounts in collections or can't afford even the minimum monthly payments, it may be time to seek professional help. A Licensed Insolvency Trustee can go over your finances with you and help you find a solution to your debt problems before your credit rating gets any worse. The best option is always to get information and advice as soon as possible. The earlier you seek help, the greater variety of options you will have available to solve your problem. Give LCTaylor a call today.

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How To Increase Credit Score | How To Improve Your Credit Rating in Canada

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Tip on how to increase credit score: Order your credit report from Equifax & Transunion, the credit bureaus in Canada, and check their accuracy. A Public Interest Advocacy Centre survey said many Canadians found an error in their credit report. Read more ideas on how to improve your credit rating here.

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What did you learn about your topic that surprised you the most?

I was unaware that we had multiple different ratings that mean different things. So, I was taught from square one what the difference between a credit rating vs a credit score, how the rating system works, how it is calculated, and how it impacts your life and the economy around you.

Provide a real-life example of how this topic is relevant or interesting for you.

I had some debt when I was younger and although I have paid them off, I always wondered why my score was not really improving. Researching about this topic showed me how long certain cases stay on your record, but it also showed me how I can help get my credit rating to where I would like to see it. It also showed me how the debt I currently have can affect me in the long term if I do not take care of it sooner than later.

If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?

The knowledge I would pass on is what all the ratings mean and how it is calculated. I find that if you are informed of how something works and how it can affect other things surrounding it, especially regarding a financial situation, it can help bring clarity. You can then fully understand how your rating is calculated, how lenders may view you, and use that to improve your financial well-being.

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This video explains the lender's decision process based on your credit rating and the role that it plays in the market. It leads further to explaining the four agencies that are used, but the key difference between each is their rating scales. Each agency has their own way of calculation ratings. It also explains what they base your assessment on in order to calculate your credit rating.

This video is a tool to show you in a relatable way how credit ratings affect yourself and the market. It also goes into depth about the agencies who are doing these assessments and breaks down how they calculate the ratings.

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This graphic shows the R-ratings scale and indicates which rating demonstrates what according to how you pay your debts. It all depends on how long you have had your debt, if any at all, and how likely you are to repay.

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Did you know that a credit score and a credit rating are two very different ratings? Let me help by supplying some insightful knowledge of the distinctions of what a credit rating is. We will go into depth into the rating scale and will unveil the impact your financial standing plays on your economic journey. Empower yourself with knowledge for a better financial well-being.

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This photo indicates how lenders would view you as a credit risk based on your credit rating, according to Moody’s rating scale. This is one of a few ways your credit is rated.