What is Your R Score?

Fixing Your R Score

Dealing with debt can feel overwhelming but it becomes more manageable when you understand how the system works.

By learning more about your finances, you’ll find it easier to address any outstanding debt issues and improve your financial standing.

Every adult in Canada has an R Score and it has a major impact on your future financial transactions.

Due to this, it’s essential to know exactly what an R score is, what it means for your finances and what you can do to enhance it.

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What is an R Score?

Credit reference agencies use R Scores to rate your credit history.

A simple numbering system, going from 1-9, is used to show whether you pay your bills on time, you’ve missed payments, or you have bad debt.

In addition to this, letters are used to indicate what type of debt you have.

R stands for revolving credit, which means you make payments in varying amounts depending on what’s owed and can then borrow more.

I refers to credit that’s repaid in instalments, such as a personal loan, and O indicates open credit, including a line of credit.

Revolving credit is the most common form of unsecured debt, so most people will see the letter R followed by a number when they look at their credit rating.

Typical ratings are as follows:

R0 – Credit has been approved by lack of credit history prevents any ratings being made

R1 – Borrower pays bills within 30 days

R2 – Borrower pays within 30-60 days (one or more payments may be overdue)

R3 – Borrower pays within 60-90 days (two or more payments may be overdue)

R4 – Borrower pays within 90-120 days (three or more payments may be overdue)

R5 – Borrower’s account is usually more than 120 days overdue

R6 – This code isn’t used within the R Score system

R7 – Payments are being made under a repayment plan, consolidation order or similar arrangement

R8 – Borrower is facing repossession due to missed payments

R9 – Collections are being made due to bad debt

As you can see, R1 is the best R Score to have.

A rating of R1 shows that you pay your bills on time and manage your finances effectively.

As you begin to slide down the scale, ratings of R2-R9 indicate various forms of financial mismanagement or outstanding debt.

Future lenders will look at your Overall R Score when deciding whether or not to offer you credit, so it’s important to maintain a high R Score.

However, millions of people experience financial difficulties, so it’s not uncommon to have an R Score that’s less than perfect.

Fortunately, there are a variety of ways you can overhaul your finances and improve your R Score.

The score is calculated by examining many different factors such as credit length, payment history, and credit utilization.

How to Fix your R Score

Everyone’s financial situation is different, so it can be helpful to access bespoke debt advice when you’re trying to improve your credit rating.

With tailormade solutions, you can make long-term changes to your finances and look forward to a bright financial future.

In the meantime, however, why not try these top three tips for improving your R Score?

1. Stay up to date with your credit history

Your credit rating and history isn’t a secret, so be sure to familiarise yourself with it.

Credit reference agencies must allow you to view your credit file, so take the time to sign up online or order a paper copy.

Remember – your credit history is continually being updated, so check in regularly to ensure all entries are accurate.

2. Have inaccurate records removed

It’s not out of the ordinary for incorrect entries to be added to your credit history, which could have a negative impact on your R Score.

If you notice something’s not quite right, contact the credit reference agency and ask to have it removed.

Although they will need to investigate before making any changes, this could have a significant impact on your future borrowing.

3. Change your payment strategy

If you routinely miss payments, your R Score is going to plummet.

Modifying your spending habits or setting up direct debits can help to reduce debt and transform your financial standing.

With expert help, you’ll find it much easier to implement realistic changes to your budget.

Getting Help with Outstanding Debt

If you want to improve your R Score, talk to a debt advisor or trustee in confidence today.

There are a range of options available, no matter what your current situation is or what your R Score is.

With the right advice, you can start improving your credit rating today.

Contact Bankruptcy Canada on (877) 879-4770 to find out more.

Information on Consumer Proposals

Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

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