The most frequent question our team is asked is “How will this affect my credit?”.
Now this is extremely difficult to gauge based on a short conversation. In today’s article we will be dsicussing about what credit is, how credit affects you and how to rebuild your credit.
Now, many consumers are not aware of how the credit scoring system works, until they are put in a situation where they require a loan. A credit score is a numerical expression that helps lenders to determine your creditworthiness when applying for a mortgage, credit card or a line of credit. Your credit score is directly correlated with the interest rate you are provided on these credit products. The score is based on a credit report and this is reported by the credit bureaus of Canada – Equifax and Transunion.
There are many things that affect your credit, here are a few things that negatively impact your credit:
- If you carry a balance on your credit cards
- If you regularly miss payments, a missed payment will remain on your credit report for up to 6 years
- The amount of your outstanding debts
- Being close to, at or above your credit limit
- The number of recent credit applications
- The type of credit you are using
- If your debts have been sent to a collection agency, it will remain on your credit report for a duration of 6 years
- Create a reminder and payment plan to always make your payments on time
- When you are making your payments ensure that at least the minimum payment is made if you can’t pay the full amount that you owe
- Spend wisely – Do not surpass 30% of your limit. For example if you have a credit card for $1,000 make sure you are not spending over $300.
- Be efficient – if you think you’ll have a hard time making your payment contact the lender right away
Credit scores are constantly fluctuating, and if your score is less than excellent, there is still a way to rebuild it. This will not happen overnight, establishing a history of paying your bills on time and using your credit responsibly will take time.
- If you carry a balance on your credit cards
- If you regularly miss payments, a missed payment will remain on your credit report for up to 6 years
- The amount of your outstanding debts
- Being close to, at or above your credit limit
- The number of recent credit applications
- The type of credit you are using
- If your debts have been sent to a collection agency, it will remain on your credit report for a duration of 6 years
Create a reminder and payment plan to always make your payments on time
When you are making your payments ensure that at least the minimum payment is made if you can’t pay the full amount that you owe
Spend wisely – Do not surpass 30% of your limit. For example if you have a credit card for $1,000 make sure you are not spending over $300.
Be efficient – if you think you’ll have a hard time making your payment contact the lender right away