Here’re a few things you can do to improve your credit/beacon score:
-Get your free credit report once a year, and make sure
nothing erroneous is showing up there. For example, you can get your free credit report from Equifax by completing this form https://www.equifax.com/ecm/canada/EFXCreditReportRequestForm.pdf.
-You can also now get your credit score in Canada online from CreditKarma.ca;
it’s free, easy (takes about 5 minutes to do) and will not negatively impact
your credit score/cost you any points.
-It’s good practice to check your credit score at least twice per year.
-Avoid debt like credit card debt, which becomes a personal obligation.
-Use “good” debt like mortgage debt (where, hopefully, if you have to sell the underlying asset against which the mortgage debt is secured, it (the debt) does away and does not stick to you personally)
-Don’t take on contingent liabilities (eg, where you co-sign for another person’s debt).
-Always pay your bills on time, even if it’s just the minimum amount due.
-Don’t agree to let landlords, suppliers, stores, contractors, employers, clients… check your credit score—you need to sign something before they can do that, and each time they check with Equifax or Trans Union, your score goes down by about 2.7 points.
-When applying for a mortgage, use a mortgage broker. They can pull your credit score once then send it to a dozen lenders on your behalf. Not only will this save you a lot of time, it means that you won’t have a dozen banks pinging your credit score, which negatively impacts it since they (the credit agencies) will deem you “credit seeky”.
-Try to pay your bills in full by the due date.
-Try to pay your debts as quickly as possible.
-Don’t go over the credit limit on your credit card.
-Reduce the number of credit applications you make. If too many potential lenders (eg, like those “don’t pay a cent events”) 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 (free) credit report.
-Make sure you have a credit history. You can build a credit history by using a credit card. You may have a low score if you don’t have any record of owing money and paying it back. If you are afraid of out of control spending, keep your credit limit low–maybe $1,000 or $1,500.
-Get more credit for your history–do not close old accounts, even if you never use them. Canceling lines of available credit hurts your credit utilization ratio. Instead, give lenders some good news to report by using old cards every six months or so to buy something small. Then pay it off in full at the end of the month.
-If you are in trouble (either through a bankruptcy or a proposal), try to re-establish your credit rating by applying for a secured credit card. A secured card is a card you obtain by depositing a sum of money with the credit card issuer. You can build a credit history by making all of your secured credit card payments on time.
-Talk to your creditors. Don’t avoid them. Sometimes you can make payment arrangements, even get them to take less. Ask them, as part of your deal (in writing), to agree not to report this arrangement to credit agencies.
Aim for a beacon score above 710; here’s why—
750 and up: You’re golden and will get the best interest rates on loans.
710-750: Though you’re not quite a VIP, qualifying for competitive offers is no problem.
650-710: Approval is easy, but platinum status isn’t likely.
580-650: You qualify for credit at subpar rates and so-so terms.
580 and below: Brace for denial and/or loan-shark rates.
-You can dispute anything on your credit history that you consider inaccurate or should be deleted because sufficient time has passed—do not allow anything to linger on your credit history.
John Ulzheimer, President, Credit.com Educational Services. Based on FICO scoring range 300-850. A higher score indicates lower credit risk.
@ profbruce @ quantum_entity
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