What’s YOUR Credit Score?

Do you know your Credit Score???  How about the importance of it??? Think of it as your financial “report card”, as it is a track record of the credit that you have established over time.  Your credit score is one of many indicators of the likelihood, that you will pay your debts. As mentioned in my previous article https://tishafindlay.com/2018/03/24/tdsr-gdsr-explained/ lenders focus on the 5 C‘s of credit during the approval process.  Credit history plays a significant role in determining whether a bank wants to lend you money.  A credit score typically ranges between 300-900, with the higher number being more favourable and indicating less risk to the lender.  It is advised that you obtain a copy of your credit bureau from both reporting agencies utilized in Canada,  at least once per year.  You can contact the automated number for Equifax at 1.800.465.7166 and Trans Union at 1.800.663.9980 to obtain this information by mail,  free of charge.  The report will be provided however a fee will be incurred if you want see your actual score.  It is possible that they carry different information,  making it worth your while to order both.  Regardless of how good,  or bad you believe your score is, there are many reasons to check it out.  If your credit is excellent,  you will want to make sure you keep that intact.  By reviewing your credit bureau,  you can verify that all the information is accurate.  You don’t want any surprises the next time you apply for a loan.  By checking it regularly, you will know if you have been a victim of identity theft which allows you to be on top of it right away.   Perhaps you have requested certain credit cards to be closed, viewing your report will tell you if this has been completed.  If your credit is poor, this will give you the opportunity to find out what you need to do to repair it.  It can take a long time,  however 100% worth the effort.  It is very difficult to obtain any form of credit when you have not been able to acquire or maintain a favourable score. If you do find that your credit is inadequate, there are ways to improve it.  Payments must be made on time every month,  stay within your credit limit,  don’t over extend yourself financially and seek advice from your bank as soon as you see signs of trouble.

For the young people reading this,  it is important to obtain credit, however I cannot stress enough that you need to be very cautious and only utilize what you can afford.  This will help you to obtain larger amounts of credit, such as a mortgage, down the road. The reason being,  is that without any form of credit you cannot build your score.  This is almost worse than having a poor credit score, as there is no “report card” proving that you can afford,  or that are responsible enough to make the payments.

There are always circumstances beyond our control that can cause the  “report card” to take a hit.  Perhaps you’ve had a job loss,  been through a marital breakdown or have a sick family member.  It is important to know that with the proper tools and guidance you can get back on track.  You have to be willing to work hard as it’s always worth the time and effort!