Excerpted from 24 Hours Toronto
- 24 Hours Toronto
Having a good credit rating crucial for consumers
If you’ve ever borrowed money to purchase a car or house, or
applied for a credit card or
personal loan, you have a credit report which is in turn used
to generate a credit score.
Though having a good credit rating is very important in today
’s credit-heavy society, many
Canadians know little about it.
“A good credit rating can make the difference
between purchasing a car, getting a mortgage at a reasonable interest rate, renting an apartment or even
getting into the career you want,” says Patricia White, executive director of
Credit Counselling Canada
(creditcounselling.ca). “Without a good rating, many things become more
difficult or more expensive.”
Credit reporting agencies track and use information on how you use credit products — such as credit cards and loans — and p.ay your bills in order to create your credit report and credit score, explains Julie Hauser, spokesman for the Financial Consumer Agency of Canada (fcac-acfc.gc.ca).
Building a good credit rating
The key to building a good credit rating is to pay your bills on time.
“That means not being even a day late with a payment on your credit cards or other credit products,” says White. “Paying on time is essential with all credit agreements and utility bills, including cellphone plans. If you can’t make the full payment, make at least the minimum payment. If you can’t pay a bill, contact the creditor immediately to make arrangements for repayment.”
Credit reporting agencies track and use information on how you use credit products — such as credit cards and loans — and p.ay your bills in order to create your credit report and credit score, explains Julie Hauser, spokesman for the Financial Consumer Agency of Canada (fcac-acfc.gc.ca).
Building a good credit rating
The key to building a good credit rating is to pay your bills on time.
“That means not being even a day late with a payment on your credit cards or other credit products,” says White. “Paying on time is essential with all credit agreements and utility bills, including cellphone plans. If you can’t make the full payment, make at least the minimum payment. If you can’t pay a bill, contact the creditor immediately to make arrangements for repayment.”
It’s also important to ensure the accuracy of your credit report by checking carefully
for errors. “Even minor errors may give lenders the wrong impression and result
in a lower credit score than
you should have,” Hauser says.
She recommends checking your credit report every six months. “Think of it as an annual check-up for your financial health. It can also help you spot signs of identity theft.”
Your free credit report is called a “credit file disclosure” by Equifax Canada (equifax.ca) and a “consumer disclosure” by TransUnion Canada (transunion.ca). It doesn’t include your credit score.
Repair a poor credit rating
Tips for i mproving your less-than-enviable credit score include not going over the credit limit on your credit card. “Try to keep your balance well below the limit,” Hauser says.
Reducing the number of credit applications you make is also helpful. “If too many potential lenders ask for your credit reports in a short period of time, this may have a negative effect on your score.”
She recommends checking your credit report every six months. “Think of it as an annual check-up for your financial health. It can also help you spot signs of identity theft.”
Your free credit report is called a “credit file disclosure” by Equifax Canada (equifax.ca) and a “consumer disclosure” by TransUnion Canada (transunion.ca). It doesn’t include your credit score.
Repair a poor credit rating
Tips for i mproving your less-than-enviable credit score include not going over the credit limit on your credit card. “Try to keep your balance well below the limit,” Hauser says.
Reducing the number of credit applications you make is also helpful. “If too many potential lenders ask for your credit reports in a short period of time, this may have a negative effect on your score.”
Another way of re-establishing credit — particularly when you have
no access to credit — is to
obtain a secured credit card
from a financial institution.
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