Know your credit rating – it’s important
You apply for a credit card and are turned down – not because your credit is bad but because your credit report inaccurately says it is. It can happen – that’s why you should keep a close watch on your credit rating. Here are a few things you should know …
A credit report is a history of how you pay your financial obligations. It is created when you borrow money or apply for credit. The companies that lend you the money or give you a credit card send the rating agencies information about the new credit arrangement including when you opened your account(s), if you make payments on time, if you have exceeded your credit limit and so on.
The rating agencies retain this information to help other lenders make decisions about granting you credit.
Credit reporting agencies There are two major agencies in Canada: Equifax Canada, Inc. and TransUnion Canada .
You should review your credit report at least once a year
(checking your credit history directly will not lower your score), ensure the accuracy of the details, and immediately report any inaccuracies. To establish and maintain a high credit score:
Establish a credit history
- Apply for a credit card and use the card to pay for monthly expenses; paying off the balance at the end of each month.
- Don’t maximize or exceed your line of credit or credit card limit.
- Be aware that setting up your first credit arrangement or loan may be little more difficult because you have no available credit history and the lender has no way to assess your payment history.
- Married couples should try to have credit arrangements for each spouse, or jointly, so both have their own credit history.
Be careful about co-signing other people’s loans
- Acting as a cosigner indicates that you have accepted responsibility for the debt and the information will be included on your credit bureau.