What Does a 900 Credit Score Mean in Canada?

A 900 credit score is perfect and basically the holy grail of scores. A credit score is a measure of your creditworthiness. It is a three-digit number that tells a lender if you are fit to be given a loan. A higher credit score shows that you are more likely to repay your debt as agreed than a person with a lower credit score.

In Canada, the credit score ranges organize credit scores into different risk categories from Poor to Excellent. A 900 credit score is the highest possible credit score indicating absolute creditworthiness because there is such a low risk the borrower will default. It indicates that they have passed all the credit benchmarks with flying colours.

Imagine the benefits and luxury perks of having a perfect credit score; such bliss! If you have the ideal credit score, the finance industry will aggressively compete for your business. Purchases, expenses, and investments will be a walk in the park for you. Here’s what a 900 credit score means in Canada and the benefits that come with it. 

What does it mean to have a 900 credit score?

How would you feel if you checked your credit score for free and discovered it’s a whopping 900? Super excited and proud of your achievements? Maybe even a little bit shocked? What did you do, that you can keep doing, in order to achieve the holy grail of scores?

The two leading credit bureaus in Canada, Equifax and TransUnion, use benchmarks to calculate your credit score which include: 

• Credit Utilization Ratio
• Payment Behaviour 
• Length of credit history
• Credit Inquiries
• Public Records 
• Credit Mix

Many believe that it is impossible to perfectly satisfy all these conditions and get a credit score of 900. Others believe it is possible, but exceedingly rare. In fact, approximately 1% of people have a credit score of 850 or more, and an even smaller portion of Canadians could achieve 900. Either way, a 900 credit score is an excellent score and the best there is.

How does my credit score affect me?

A credit score impacts whether or not you can access money when you need it, and essentially, your quality of life. Potential employers, lenders, insurance providers, and most financial institutions use your credit score to assess your creditworthiness and even your character. This reality implies that a significant part of your life is impacted by how good or bad your credit score is.

If you have a good credit score, you should still work on levelling up to an excellent score, like 900 if you can, because your credit score can determine your standard of living.

1. Access to credit & lending 

If you need access to credit, like a personal loan or line of credit, for example, your credit score can either make it possible or stand in the way. Your credit score helps determine whether or not your application will be approved, how much money you qualify for, and the interest you get. 

If you have a lower credit score, your interest rate will be higher with a lower credit limit. If you have a higher credit score, your interest rate will be lower and could qualify you for a larger loan. 

Consequently, your credit score has the power to limit your borrowing power and cause you to receive a smaller loan than what you actually need. A very poor credit score could prevent you from getting approved for lending altogether. A higher credit score, on the other hand, will leave you with better loan options and more of them. 

2. Access to the best credit cards

Having a credit score of 900 can be incredibly advantageous when applying for the best credit cards. Credit card companies often reserve their top-tier, premium or black credit cards for applicants with exceptional credit scores. These premium cards come with a range of benefits, such as higher credit limits, generous rewards programs, exclusive perks like airport lounge access, concierge services, and travel insurance. With a 900 credit score, you are more likely to qualify for these elite cards. For example, the American Express Platinum card comes with an impressive range of benefits.

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But you don’t have to focus on premium and sometimes expensive cards. Have you heard of credit card churning? A high credit score not only increases your chances of approval for the best credit cards but also expedites the approval process. You can use it to open multiple credit card accounts with the intention of reaping the welcome rewards such as cashback, points, or miles. Every now and then, credit card companies change their welcome offers. They compete to attract clients. Calculate how much you have to pay (in fees but also spending requirements) in order to get the rewards. If the balance is interesting, go for it! Many people use this hack to travel for free.

3. Lower insurance premiums

Having an excellent credit score can positively impact your insurance premiums in several ways. Basically, you’ll get lower premiums. Insurance companies often use credit scores as a factor in determining insurance premiums. Individuals with excellent credit scores are typically seen as less risky to insurers. Therefore, they are more likely to receive lower insurance premiums compared to those with lower credit scores.

What you may not know is that insurers believe that individuals with good credit are less likely to file insurance claims. This perception of reduced risk can lead to lower premiums and discounts. A strong credit history can also make it easier for you to qualify for higher coverage limits or more comprehensive insurance policies. This means you may have better protection against potential risks and liabilities.

Moreover, insurance companies may process your application more quickly if you have a high credit score. This can be especially beneficial when you need coverage in a hurry, such as for a new car purchase.

4. Employment

Have you ever had to consent to a credit check during a job interview? Potential employers can check your credit and the practice is becoming more common. The contents of your credit file can tell an employer a lot about your character. So, having a bad credit score could cost you a job!

5. Leasing or buying a car

In order to lease or buy a car, you may need to pass a credit check. When you apply for a lease or a car loan, most dealerships will check your credit too. It helps them determine if you can be trusted to take care of their asset and/or make your payments on time. If your credit is poor, they are more likely to deny your application. With a 900 credit score, you will certainly have access to 0% (or close to 0%) financing! This is great, as car prices are on the rise. At least, you won’t have to pay high interest on your purchase.

6. Finding a place to live

Before any landlord rents out their property to you, they must evaluate if you are a desirable renter. Many landlords will run a credit check as part of the application process. If you intend to own our place one day, you’l also have to go through a credit check to get a mortgage.

If your credit score is below average, you will have a hard time competing against other applicants with better credit. Landlords prefer tenants with good credit scores because it means they are less likely to default on their rent payments.  If you’re a future owner of a house, you’ll want to secure those low rates on your mortgage. They’re only available to people with an excellent credit score. A low rate will save you hundreds of dollars every year, maybe more (depending on the amount borrowed).

What a 900 credit score can do for you

It might be hard and take many years to hit a 900 credit score, but you can do it. In the meantime, Equifax considers 800 and up an ‘excellent’ score too, so there’s nothing to feel bad about if you’re still in the 800 Club. 

Let’s consider the benefits of having a perfect credit score. First and foremost, a 900 credit score can improve your lifestyle. It’s very unlikely anyone will deny your credit application with a high credit score, assuming you can afford the payments. 

Instead, you will be the one having a hard time trying to pick the one that best suits your needs and goals. You won’t have a problem accessing the funds you need to achieve your goals. Clearly, a 900 credit score can open you up to a new world of possibilities to live your best life.

When you apply for loans, you will have better options and the power to choose from several options with the best terms and interest rates. Not to mention, a 900 credit score gives you access to some of the most prestigious credit cards on the market. 

Ways to keep your credit score to an all-time high

If your credit score is in the 800s, there are things you can do to try to reach 900. Here are the best ways to increase your credit score:  

1. Never miss a payment

If your credit score is already in the 800s, you probably already know that, but we can’t stress it enough: never miss a payment. To improve your credit score, you not only need to pay your bills and debt obligations before time, you need to make the full payment. Remember, a credit score is an indication of how trustworthy you are, and your payment behaviour tells lenders whether or not you honour your loan contracts. 

2. Do not close your accounts

You need to show lenders how reliable you are on the long term. That is why you should not close old credit card accounts, even if you don’t use them very much anymore.

3. Reduce your credit utilization ratio

Your credit utilization ratio is a number that tells lenders how you handle easy-to-access credit from your credit cards and lines of credit. It measures how much you owe those specific credit products against the credit limit. For example, if your card has an amount of $10,000 on it and you charge up a balance of $3,000, then your credit utilization ratio is 35%.

A high credit utilization ratio shows that you are dependent on credit, which makes you look riskier to creditors because it could signal financial mismanagement or hardship. On the other hand, a ratio under 30% indicates that you do not depend on credit to live your life.

To lower your credit utilization ratio and boost your score, pay off your debts and credit card balances each month. For example, if you have a home equity line of credit, pay anything you owe on it (not simply the interest).

4. Increase your credit limit 

Every credit card and line of credit comes with a credit limit, which is the maximum amount you can spend. If you owe a balance that is more than 35% of the credit limit, it hurts your credit score. For example, if you have a credit card with a $10,000 limit, you don’t want to carry a balance higher than $3,500 because it is 35% of $10,000.

If you use more than 35% of your actual limit, consider asking your credit card company to increase the limit. For example, increasing your credit card limit from $10,000 to $15,000 means that the same $3,500 balance is now about 23% of your credit limit. It’s pretty simple they’ll likely accept, given your excellent credit score!

Doing so will reduce the percentage of credit you use relative to your credit limit, and the higher limit can always come in handy in times of need. As long as you don’t charge more on the card and increase the balance, it will be useful to keep your credit score at an all-time high.

5. Apply for new credit

Every time you apply for credit and consent to a credit check, it is recorded on your credit report as a “hard check.” These inquiries can hurt your credit score, especially if there are several of them in a short period of time. You have to limite these inquiries, but at the same time, be mindful to keep a variety of credit types.

Credit mix counts for more or less 10% of your score. If your car loan is coming to an end, for example, consider replacing it with another loan. The idea is to have a mix of credit other than credit cards. However, if you have only one credit card, don’t hesitate to ask for a second one. We normally don’t encourage people to borrow more and more, but if you have a 900 score, you’re probably good for it!

6. Check your credit file often 

The information in your credit file impacts your credit score, and that information is submitted to the credit bureaus by human beings. Mistakes happen and they can hurt your credit. Check your credit often to make sure everything is accurate and up to date. 

You can use a free app like Borrowell to check your own credit as often as you want without hurting it. If you find a mistake, you can dispute errors on your Equifax report and errors on your TransUnion report. 

Conclusion

A perfect credit score is not a myth and you can achieve it too. However, it will take a lot of time and discipline; patience is key. You can start to build your own perfect credit score with the little financial decisions you make today. Take time to sit back, strategize and visualize your goals. Hard work pays off. So keep up the excellent work, you’re on to something excellent!