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Archive for the ‘Credit Score’ Category

Improving Your Credit Score – Government Advice

The government is looking out for you. If you have a poor credit score then there is help but you have to be careful. This article from the Government of Canada has some very helpful advice.

If your credit score is not as high as you think it should be, make sure that the information in your credit report is correct. If it is correct, read your report carefully to find out which factors are most likely having a negative influence on your score, and then work to improve them.

Here are some tips, from the Financial Consumer Agency of Canada (FCAC), on how to improve your credit score:

  • Always pay your bills on time. Although the payment of your utility bills, such as phone, cable and electricity, is not recorded in your credit report, some cell phone companies may report late payments to the credit-reporting agencies, which could affect your score.
  • Try to pay your bills in full by the due date. If you aren’t able to do this, pay at least the required minimum amount shown on your monthly credit card statement.
  • Try to pay your debts as quickly as possible.
  • Don’t go over the credit limit on your credit card. Try to keep your balance well below the limit. The higher your balance, the more impact it has on your credit score.
  • Reduce the number of credit applications you make. If too many potential lenders ask about your credit in a short period of time, this may have a negative effect on your score. However, your score does not change when you ask for information about your own credit report.
  • Make sure you have a credit history. You may have a low score because you do not have a record of owing money and paying it back. You can build a credit history by using a credit card.

(more…)

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Nine Steps to a Better Credit Score

Originally posted by Dianne Nice on theglobeandmail.com on Nov 22, 2010.

My husband and I are pretty competitive, always trying to one-up each other.

It was to my chagrin, therefore, when I learned that although my credit score is excellent, his is better. I have never missed a bill payment, never carried a balance, so what could be holding me back?

According to author and former financial adviser Kelley Keehn, there are lots of innocent things that can affect your score. For example, most people don’t realize there are two important dates when it comes to paying off certain credit cards: the due date and the statement date. The statement date is when the card issuer reports your balance to the credit bureau, not the due date. So even if you pay your balance in full and on time each month, your credit score may not reflect that.

“Let’s say my due date is Dec. 8 and I have a $10,000 limit. I pay it in full before the 8th and won’t be subject to any interest,” Ms. Keehn says. “But, let’s assume my statement date is Nov. 15 – that’s a very important date as it’s the date the credit card company reports to the credit bureau, not the due date. Let’s assume I make a big purchase on the 14th, say for a reno at my home, not thinking anything of it, and pay for some hardwood costing $9,000. The next day the credit card company would report that I’m 90 per cent extended on my credit card.”

If you’re not sure of your credit rating, you can get a free report from Equifax.ca or Transunion.ca that will include your credit history and current credit outstanding. For a small fee, they will include your credit score as well. A good score is 760 or higher, and anything less needs work to improve it, Ms. Keehn says. (To order a free credit report from Transunion, click here. To order from Equifax, call 1-800-465-7166.)

She advises taking these steps to protect and improve your credit score:

1. Know your score. The score range in Canada is 300 to 900 – the higher the better – and reflects a person’s credit history over the past six years. Only 5 per cent of Canadians have a score of 850 or better. Checking your score periodically can alert you to mistakes as well as credit fraud.

2. Pay your bills on time. Making a credit card payment even one day late will hurt your score. If you’re paying online, send the payment at least three banking days before it’s due to allow enough time for the transaction to be processed. Setting up a small automatic payment to your card issuer each month will ensure you never forget to pay at least the minimum.

3. Never exceed your credit limit. If you’re close to being maxed out, make sure you pay more than the minimum or the interest due could push you over your limit. Going even $5 over your limit could lead to a costly fee from your credit card company and will hurt your score each month it happens.

4. Don’t apply for store credit cards. Even if you’re just after a one-time discount for signing up, these cards, with interest rates as high as 29 per cent, are viewed negatively by the credit bureau and drag down your score.

5. Spread out your spending. The percentage of available credit you’re using each month affects your score, so it’s better to have two charge cards at 50-per-cent capacity each than one that is maxed out.

6. Prioritize your payments. Important as they are, mortgage payments generally are not reported on Canadian credit reports, so it’s more important to make your credit card, loan and lease payments on time.

7. Beware of closing accounts. Even if you’re in a dispute with a lender, make your payments. A missed payment will show up on your credit report, can really hurt your score and is very hard to fix. When closing an account, get it in writing that it was closed with a zero balance.

8. Don’t close unused credit cards. If you have a low-interest card you don’t use, keep it open and use it periodically. Having a zero-balance credit card actually helps to improve a low score.

9. Don’t apply for too much credit at once. Don’t lease a car, sign up for a new cellphone and apply for a loan all in the same month or two. The credit bureau sees this as a sign of financial trouble. Beware, also, of being preapproved by several lenders before you’re ready to buy. Although you can check your own credit rating without penalty, preapprovals from lenders count against your score.

[end of article]

Reasons to Review Your Credit Report

Gail Johnson writes about why it’s important to review your credit report and what to look for. Originally posted on Yahoo Finance Canada, October 2012.

Canadian credit report basics
Your credit report might not be the most scintillating read, but financial experts say it’s vital to pore over it regularly.

“We definitely recommend people check their credit-bureau file at least once a year,” says Canadian Association of Credit Counselling Services’ CEO Henrietta Ross. “If there’s something incorrect you want to have it fixed right away.”

Even seemingly minor mistakes, such as a wrong address or phone number, could cause problems when it comes to applying for credit.

“If you were buying a car or a home, and the lender finds an outstanding amount owing [on your credit report], you could be denied,” says Julie Jaggernath, education media manager at the Credit Counselling Society. “If you were wanting to remove subjects on a house purchase, that would be very stressful.”

Then there’s the potential to spot identity theft

“If there’s any activity on your credit report that’s not yours, it could be because someone has stolen your information,” notes Jaggernath. “Seniors are especially vulnerable to that.”

Other things to watch out for, according to the Financial Consumer Agency of Canada, include:
•Incorrect date of birth
•Errors in credit-card or loan payments, such as those that were made on time but that are appearing as being late
•Negative information about your status that’s still listed even after the maximum amount of time it’s allowed to stay on your report, such as bankruptcy
•Accounts that you never opened yourself, which could be a sign of identity theft

You have the right to dispute any information on your credit report that’s wrong.

Mistakes should be corrected promptly because they can give lenders the wrong impression. You could be turned down for a credit card or loan application or receive a lower credit score than you should have.

Companies that lend money or issue credit cards, such as banks, credit unions and retailers, send details related to the financial transactions they have with you to Equifax Canada and TransUnion Canada. All that information forms a snapshot of your credit history. It’s important to check both, as they might contain different information.

There are regulations in place to protect your personal information, but a range of organizations and individuals can access your credit history, including cellphone companies, insurance companies, governments, employers and landlords.

Your credit score is a judgment about your financial well-being. It indicates the risk you represent to lenders compared with other consumers.

Equifax and TransUnion use a scale from 300 to 900. The higher your score, the lower the risk for the lender.

“These days, anything below 625 would be an area of concern, in general terms; anything above 750 would be considered a strong score,” Ross says. “People should also know it is possible to improve your credit rating and score through wise use of credit. Keep paying those bills on time; pay in full whenever you can; don’t overextend on your debt; and use credit wisely so you can establish credit history.”

If you have a strong credit score, the Financial Consumer Agency of Canada recommends using it to your advantage when you negotiate interest rates on loans.

Equifax provides a free credit file disclosure via mail. However, this doesn’t include your credit score. To get that, Equifax charges $11.95.

TransUnion offers Canadians a free copy of their “consumer disclosure report” by mail. A credit profile costs $14.95, while a credit score is $7.95.

Jaggernath points out that TransUnion has 22 years of people’s information on file, but only information from the last six years is used to calculate their credit score.

“You want to be checking it for accuracy,” she says. “There’s always the chance of human error.”

[end of article]

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