Credit Score Sucks A**; Now What?

After you read my previous post about credit reports, I’m sure ALL of you rushed out to order your free copy of your credit history! (I can hope, can’t I?) So what if your credit score is less than ideal?

Here are some quick tips for using credit responsibly:

  • All your bills should be paid on time with at least the minimum required payment. Even though most bills are not reported to credit agencies, some cell phone companies may pass along late payment information.
  • Debts should be paid off as quickly as possible.
  • You shouldn’t be maxing out the credit available to you. Try to keep the amount you use (borrowed) under 30% (or even 10%!). The higher the ratio between the amount of credit you are utilizing vs. the amount of credit you have available to you will have an impact on your credit score.
  • To increase your credit score, avoid loan consolidation. This also affects the previously mentioned ratio (amount utilized vs. amount available). In other words, it is better to have smaller balances on a larger number of cards than to have a bigger balance on one card. (No balance is ideal. Just throwing it out there).
  • Understand the difference between hard inquiries and soft inquiries. Whenever you check your credit score, this is a soft inquiry. Soft inquiries also occur when a business you already have an account with checks your credit report, or if a business checks your credit report for promotional purposes. Soft inquiries will not affect your credit score. Hard inquiries are made by lenders. One or two hard inquiries a year are considered normal, so avoid applying for multiple credit products (new credit cards, loans etc.) within a year.
  • A long credit history is beneficial to your score, so avoid cancelling ones with a longer track record

There are no easy fixes to your credit score unfortunately, but it can be done. Ultimately, if you are looking to improve your credit score, one of the first places I would look at would be your spending habits and cash flow, as this would be the root of the problem. Calculate your net worth and set up a budget (even if it is only for a few months) to have a better understanding of where your money is going. One of the things I have learned from working with my clients is that there is a BIG disconnect between what people THINK they are spending, and what they are ACTUALLY spending.

Do you keep apprised of your credit history? Do you have an idea of what your credit score is? Have you ever been refused credit?

I need your help! As this is a new blog, please spread the word on Facebook, Twitter, or email the link to a friend or family member. Thanks for the support!


Credit Report – Great Additional Information!

I have a friend who is in the business of facilitating credit to clients (credit advisor) and he has these words of wisdom to share.

To Start here is a link to help a little with the topic of credit.

Here is a link with the 2 Major Canadian Reporting Agencies.
(I only use those 2 links as I have permission from the company)

Credit Reports are one of the most interesting topics to talk about as there is no 1 person with the same history or “fingerprint”.  I have been studying credit reports for many years now and find that a majority of people don’t know what their credit is like, or are unknowledgeable of what is in it. As I could talk on this topic for many hours (and many people don’t have many hours to stare at a single post), I will try to post in a brief manor.

First of all, I would like to say that, in my opinion, credit should be taught at a much younger age than it is being currently taught at (please enter age it is currently being taught at here___). (I personally think it is never actually taught! ~Vicky) I strongly believe that a person should frequently check their credit rating on both Canadian Agencies (Equifax and Transunion). A person’s credit history will not always be consistent on both agencies. Some lenders will use Equifax to pull bureaus and some will use Transunion.

I personally check mine monthly (maybe more) to tackle any errors that might come up. I find that tackling an error in the first 3o days is easier than approaching a company a year later to correct a mistake. If there is a mistake on a bureau it could take 90 days for the agency to correct this. If a person is in the middle of applying for credit (mortgage, car loan, LOC (line of credit), HELOC (home equity Line of credit), etc. the 90 days could be the difference between approval and decline. Credit takes a long time to build but can take 1 moment to put a person into a higher percentage bracket.

I can go into some specifics on a later post about credit but I will suggest a couple things to remember now:
1) credit cards- If you don’t have the means to pay it back within 21 days (grace period) then don’t put it on your credit card.
2) Car loans- a great idea to either build credit, or to maximize the use of your liquid $$ for other investments (instead of paying cash for your vehicle). Please remember: a vehicle is still and always will be a depreciating item.
3) Mortgage- obviously a great choice as property is still, in my opinion, the only appreciating asset.
4) LOC (line of credit-unsecured)- a great item to have especially if the interest rate borrowing is low. You can actually use a line of credit for other investments if the ROI (return on investment) is higher than the rate on the LOC. Also great for LARGE purchases such as home repairs that will build more equity into a home.
5) HELOC (home equity line of credit)- usually less interest rate then a LOC and can also be used for the same thing. Keep in mind that this loan is directly tied to your homes’ value and current mortgage balance.

Please keep in mind that the above is only my opinion. When I have some more time I will post some more opinions.

I think the information provided is great; I will definitely look into the second agency to see if there is any way I can get a free report as well. If I am able to, I will definitely update with the information needed. I also agree that credit should be taught to kids as credit has such a huge impact on every day life. We will all use credit in one way or another and very few (myself included!) have an understanding on how our credit rating is calculated and how this affects the rate at which we can get our mortgages or other types of loans. Thanks for sharing!

Did this week fly by for you as well? I hope you all have a wonderful weekend, and safe travels to the friends heading off to sunny destinations!

I need your help! As this is a new blog, please spread the word on Facebook and/or Twitter! Or email the link to a friend or family member! Thanks for the support!

Time for Annual Credit Report!

A friend once described your credit history as your financial fingerprint. I thought it was the perfect analogy. Your credit rating is a measure of how dependable you are on repaying your debts, whether they are credit cards or car loans or mortgages. A good rating determines how easily you can obtain more credit as well as the rate you would pay to borrow the money.

One of the things I do every year is to check my credit report. This report lists all your credit cards and their balances, and any outstanding loans you currently have. Basically all the credit you currently use and have access to.  It also shows you a list of companies who have requested access to your credit history. It is good to check this to ensure that there are no discrepancies or errors on your report.

I have been using Equifax to request my free report. You can send them a request through the mail, or you can call them at 1(800)465-7166. To complete the application on the phone, you will need personal information such as your SIN number, your birth date, your address and postal code, as well as a current credit card. The whole process took me less than 5 minutes, although my strong Asian accent was apparently enough to confuse the automated telephone man. 🙂 Once you complete the application, it should take about 3-5 working days to receive your report. It also gives you an option to request your credit rating, but this will cost you $9.95. I don’t know what my credit rating is, but would be interested in this number if I wanted to borrow money to purchase a car or a house.

Fortunately, my reports have been accurate and I continue to monitor this on an annual basis. Check through your report carefully; if you notice any errors, you should get this fixed as soon as possible. This is also a good way to catch any fraudulent activity that will have an impact on your credit history. A good credit history and rating could save you tons of money, so it is worth spending a few minutes every year to make sure everything is up to snuff.

Have you ever checked your credit report before? Is this something you monitor on a regular basis? If you do, have you ever noticed any errors or fraudulent activity?

I need your help! As this is a new blog, please spread the word on Facebook and/or Twitter! Or email the link to a friend or family member! Thanks for the support!