Maintaining good credit – There`s more to it than you think. Read below as you will likely learn something new. The information can apply to anyone – First-time home buyers to existing homeowners looking to refinance.
A person`s credit history is stored in a database called a Credit Bureau. Credit Bureaus are privately run companies that collect vast amounts of data about how we handle the credit accounts we already have.
Credit Grantors update individual credit reports regularly by providing information to the credit bureau about their customers’ credit and payment activities which ensures that credit reports remain up-to-date and as complete as possible.
Your credit score is based on a statistical analysis of your credit history. In general, the higher your score, the lower risk you represent to lenders in terms of paying back your loan. Alternatively, the lower your score, the greater credit risk you are assumed to be.
Credit scores are not always the sole determinant for approval or rejection, however they are a very important factor in that decision.
If the loan is approved, credit scores can also impact the interest rate offered. Generally speaking the higher the credit risk, the higher the interest rates.
Common unsecured credit items can include –
Lines of Credit
Common secured credit items can include –
TIPS for maintaining good credit!
» Make your payments on time!!!
» Keep your credit card and credit limit balances low
» Limit your credit applications
» Manage your overall debt
» Don`t close inactive accounts
» CHECK YOUR CREDIT BUREAU ANNUALLY FOR ERRORS AND SIGNS OF FRAUD!! www.equifax.ca
BENEFITS of maintaining good credit…..
» CONVENIENCE! -No need to carry large amounts of cash around when shopping
» Booking things online such as hotels, flight, rental cars, etc
» Access to funds for emergencies
» Opening a bank account/chequing account requires a credit check
» Student loan approval requires decent credit history
» Property/Vehicle insurance policy approval usually requires credit check (for payment plans)
» Potential Landlords usually require credit checks-Whether you want to rent a residence, or, if you wanted to lease space for your business
» Employment screening process can involve a credit check
» Collection of credit card reward points can be put toward future trip expenses
KEY BENEFIT – If you have a good credit score, you’ll almost always qualify for the best interest rates and you’ll pay lower finance charges on credit card balances and loans. The less money you pay on interest, the more you have for everything else including repaying your balance.
Let me know if you have questions! I have been a Mortgage Consultant since 2005 and worked in Unsecured Lending as well as the Collections Industry prior to that so have a lot of knowledge on this topic.