The Importance Of A Credit Score And How It Could Impact You Financially
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Easy Tips
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Friday, 20 July 2018
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Credit Tips
The higher the score, the better, with the low being 300 and the max being 850, Carl Carlson, CEO of Carlson Financial said. We all know that someone with a low credit score might not be approved for a loan or a new credit card, but what if you don’t plan on borrowing money, Even those with low credit scores can be approved for credit, but they will have to pay higher interest rates, meet specific conditions, or put down deposits for things like utilities, Carlson said.
Your score can affect your insurance rates and cost you hundreds of dollars per year in additional premiums. Also, employers are increasingly checking applicants’ credit reports and might use it to gauge responsibility, whether or not that’s accurate. Carlson said as you increase your credit score, it opens access to better credit products and paying less to use them, for example, 0% interest car loans. If you experience something like foreclosure or bankruptcy it will stay on your credit report for seven years, hurting your credit score the most early on, Carlson explained.
There is no magic formula to build it back, you’ll need to look at what got you into trouble in the first place and work on fixing that first. 3,000. You also don’t have to close out unused credit cards because they might help you by showing a longer credit history. Carlson said many free credit reports are legitimate and you should be checking your credit score regularly to make sure you’re on track. This is called a “soft-inquiry” and won’t hurt your score. On the other hand, when you apply for credit and a lender pulls your score, this is a hard inquiry and could ding you a couple points, so Carlson suggests being selective about applying for credit.
The credit reporting system is similar to the driver’s licensing system in that everyone has their own record. No one shares a record. If a policeman pulls you over for speeding, you can’t get the policeman to put the ticket on your spouse’s driving record. It goes on yours if you are at fault.
The same is true with your credit report. If the debt is only in your name and you are late with your payments, the late payments are only reflected on your credit report. However, if a debt is joint, then the late payment notation goes onto both credit reports. When a lender grants you and your spouse credit based on a joint application, they are approving the loan credit application based on the fact that two people have promised to repay the debt.
Just because you no longer live with your spouse or are divorced from your spouse does not change anything from a lender’s point of view. If you want to change who is responsible for a debt, you or your ex-spouse must either pay out the debt with a new loan or re-qualify for it in only one person’s name.
If you don’t do this and leave the debt as it was, you remain fully liable for the repayment of that debt. If you thought that your ex-spouse was making payments on that debt, but the creditor informs you that they have stopped making payments, then it is your responsibility to continue those payments.
If it took the creditor a while to track you down, your credit could be damaged by the missed payments that you didn’t know about. So your credit score can be impacted by your ex-spouse if you still have any joint debts with them because a divorce only dissolves a marriage agreement, not a joint borrowing agreement.
If you go bankrupt, a record of the bankruptcy will remain on your credit report for 6 to 7 years depending on which province you live in. During that time, the bankruptcy notation will negatively impact your credit score and make it difficult to obtain credit. However, after the 6 or 7 years, the bankruptcy record and all records of bad debts (that are the same age) will usually be removed from your credit report, and this will allow you to get a fresh start.
If you are struggling with your debts and are considering filing for bankruptcy, there are many good bankruptcy alternatives that can work out much better for many people. Click here to learn more. While becoming debt free and staying debt free is a fantastic way to live, it’s not a silver bullet for your credit score. Your credit score is based on your credit behaviour and payment history, not just the amount of debt that you have.
Not having any debt will help your credit score as long as you maintain at least one active credit account—like a credit card or a line of credit. If you don’t have any active credit, the credit scoring system doesn’t know how you are currently handling your obligations. If you use one credit card occasionally and pay it off completely every time you get the bill, then the credit scoring system can see that you are using credit responsibly.
Knowing how the credit scoring and credit reporting systems work can help you make borrowing and credit decisions, however, credit scores can change monthly. There's no need to actively seek your credit score on an ongoing basis. Focus instead on managing your money, budget and debt carefully; your score will take care of itself. For more information about how your credit score is calculated, click here. How do parking tickets affect your credit, Does your credit score fall every time someone checks it, How to get a super credit score. 3 common ways people wreck their credit. You don’t have to be in debt to build credit.
A tri merge credit report gives you the complete picture of everything that is being reported to the three major credit reporting agencies about you and your credit habits. It is a good idea to get a copy of your government free credit report and review it for accuracy. A number of companies that verify your fico score only retrieve a credit report on you from only one of these bureaus, but you really don't see which one they even make use of unless you ask them.