"Knowing your credit score is the most important step you should take before jumping into a dealership(...)". That is my opening statement to anyone who is looking for a car. If you know it, then you have on your side any fallback a shady salesperson can come up with. Now, here is the question that comes to the table: is it 700 a Good Credit Score in Canada? As responses are extensive, I will keep it simple (a short reading) and will use a real-life example of a Car Leasing Credit Check for a person around the 700s.
If your credit score is low, then you should strongly consider evaluating the options of a lease takeover.
It is Important, but not the Only Factor
Your Credit Score is the result of many related financial details that somehow "describe" you. It gathers together multiple elements like:
- Your Current Income
- How long have you been in Your Current Job
- Current Debt
- Total Credit Limits
- Credit Limit Percentage of Use
- Previous Missed Payments
So, even if you have 780 which, if you put it on a scale, is Very Good and almost Excellent, it doesn't mean that by the number itself things will work. All those other factors weight on your actual score and will be analyzed too.
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700 is Actually Good
I would say 680 may be the bottom line of a good Credit Score in Canada to go with a reasonable loan contract. Anything above 700, will be naturally way better. So I'm going to present a real-life, anonymous example of Person A, who is interested in leasing a vehicle, but pre-checked his/her Credit Score ahead to avoid surprises.
On this example, during November 2017, Person A got an Equifax Credit Score of 708 and a TransUnion one of 635. As you may notice, both Credit Bureau's algorithms are apparently different, where Equifax centers more in debt categorization and TransUnion more on a detailed debt description, re-payment speed, and overall report. I won't go into much detail regarding these specific details, so we will keep it simple. And do not average these: those are entirely separate and not "so" related numbers.
Your Lender will Have the Last Say
As I mentioned before, the numbers were 708 and 635, but this is just a reference for you and your lender. When you sign and agree to run a Credit check, it means that you are granting access to obtain a full and detailed Credit Report (generally from both Bureaus) that will describe every vital aspect of your score.
So it will depend ultimately on the specificities of the financing institution, but I would say that a 700 Credit Score is good enough to be accepted for a loan in most places. It should be enough for that 0% financing or 1,99% APR Lease Rate you saw on the ads ;)
Still, have a Backup Plan
As it is something that usually may not depend only on "the number," and multiple factors will actually define the outcome, it is not a bad Idea to have a backup plan. A backup plan can be as simple as having someone you trust and that trusts in you, to co-sign the agreements while granting his/her credit history as a creditor of trust.
In this case, your partner or tutor is the ideal person to come up with a more robust financial status to back up your request. But remember, it doesn't mean that this person will pay, by default. In fact, when you sign a loan with someone else, you both are responsible for the contract. You primarily and then they, if you fail to do it yourself.
It is normal, either because you are starting, you just landed in Canada, you are young, or just your credit history is not reliable enough, that you can co-sign a contract for getting acceptable rates on a Loan.
So, in the previous example (or real example), Person A signed the Credit Check and pre-set the possibility of having his/her partner to call the Dealership Financial Advisor in the eventuality that the primary financing company required more warranties or intended to offer a higher interest rate. Of course, it wasn't needed, but the backup plan was ready to go at a reasonable rate, just in case.
