21 Oct Give yourself some credit

Give yourself some credit

You’ve decided you want to assert your financial power.  Great!  But…  Where should you start?

Perhaps I’m biased, but  in my role as a mortgage professional, I meet with women at the point when they are hoping to buy a home soon.  And one big challenge, whether they are single, married, divorced, or widowed,young or not-so-young, is that they usually have only a vague idea of what their credit looks like.  Further, they often aren’t totally sure whether they will be in a position to qualify for the best lending options, or what they should be doing to be able to influence the outcome.  This creates unneeded stress and worry.  Who needs that?

Go ahead: check your credit rating and credit report!

I’d recommend you begin taking control of your financial well-being by checking out your credit rating and your credit report. The reason I say this is not only to set you up for success should you plan on buying a home.  Your credit history can determine many things, including:

• Whether or not you qualify for a mortgage
• Whether or not you qualify for a loan
• Whether or not you qualify for a credit card
• Whether or not you can rent a home
• Whether or not you will be hired for a job

Credit issues that might cause problems…

You may be surprised to find out that having no credit is almost as much of a challenge as having bruised credit.  What can be a problem is:

• Not having enough credit in your own name, so it’s hard to tell if you’re a good credit risk.
• Having credit in your name, but it’s not “good credit”
• Having errors on your credit report, due to mistakes or identity theft

How do you check your credit?

Don’t be afraid to do this. You have a right to know what’s in your credit report!  There is no negative effect resulting from checking your credit yourself.

In Canada, lenders use credit information gathered by either Equifax or TransUnion.  The information they have on file is not always the same, so you should check both.  You should definitely review your credit at least once a year.

What to look for:

• Number of “trade lines” – you want two or more that are in good standing.
• A credit rating – the higher, the better; you want a number of 600 or higher.

One thing to keep in mind is that time heals all (credit) wounds. Even serious problems like bankruptcy eventually disappear off your credit bureau. What you can do to improve your score:

• If you do have credit cards or loans, pay them religiously.   With credit cards, pay at least the minimum payment by the due date, and keep any balances below 30-50% of the credit limit.
• If you don’t have credit cards or loans, and can’t get any, you can start by obtaining a secured credit card with a company like Capital One (take a look at their “Guaranteed Mastercard” product).
• Make sure your track record of payments on everything is absolutely perfect.
• If you notice mistakes, advise the credit bureau immediately.  Be prepared to provide written proof.

To learn more about credit:

There are some great sites out there that talk about credit in much more detail.  You can take a look on my own website, where I have articles on Credit, Establishing Credit and Reparing Bruised Credit.  I also really like the in-depth pamphlet Understanding your Credit Report and Credit Score that is offered by the Financial Consumer Agency of Canada.  It may seem a little lengthy but I think you’ll find that it’s a very straightforward read with some great examples.

Again, don’t be intimidated!  Take a deep breath, then go to Equifax and/or TransUnion and see what they have to say about you.

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