#Credit Score vs Credit Rating

The terms credit score and credit rating are used almost interchangeably. Is there a difference? Well, it depends. Usually in casual conversation there is not, but strictly speaking your credit score ranges from 300 to 900 while a credit rating ranges from 1 to 9 and is specific to every item in your credit history.

Let s go into more detail:

Your Credit Score

Your credit score says a lot about how financially responsible you are. It s a reference point lenders use to determine how risky a borrower you might be. Credit scores are calculated by two Canadian credit bureaus: Equifax and TransUnion, and as mentioned above, credit scores range from 300 to 900. Typically lenders set a minimum credit threshold for their clients; and of course, this number is not universal, it changes from lender to lender.

Do you want to see exactly how your credit score is determined? Click here to see how your credit score is calculated.

Your Credit Rating

Some credit bureaus report a rating of every item on your credit history individually and the rating ranges from 1 to 9, where a rating of 1 shows that all payments are on time, and a rating of 9 means that bills are never paid or a consumer proposal has been submitted to the lender.

Sometimes you will see a letter before the number (e.g. I3). You can have one of three letters before each number: I, O, R, and they mean the following:

I: your loan is being repaid with regular installments for a specific period of time. I is for installment.

O: you have open credit, such as a line of credit or student loans. O is for open.

R: this implies revolving credit, where your payments depend on your account balance. A good example is a credit card. R is for revolving credit, and this is the most common type of credit rating.

These are the different R ratings one can have, in accordance with the North American Standard Account ratings:

R0: Too little credit history or, credit unused.

R1: Pays (or paid) within 30 days of payment due date or not over one payment past due.