Archive for the ‘credit score’ Category
I always preface a discussion around the credit reporting system by stating how frustrating the system can be. In some ways it is very black and white, yet in others very grey.
The first frustrating part is that there are two main credit reporting agencies in Canada – Equifax and TransUnion. One would think that they would have mirror files. They do not. Some lenders use one service while others use both. So to begin, may I suggest you check both reports for accuracy.
So here are some of things you should know about your report and the reporting industry in general:
- you are entitled to your report. It is your information. And it is free
- you can access it either in person, by telephone, online (by printing and completing a form), and can fax, email or mail in your request.
- you can also pay a fee for your report. At this point you are probably asking, “Why would I pay a fee if I can get it for free?”. The answer is, you get a bit more when you pay a fee. The report looks prettier and you get, most importantly your credit score (will blog on this a little later)
- you should check your report at least six months prior to applying for, or renewing, your credit. This allows you enough time to correct any errors or misrepresentations
- Should something be mis-reported, your first point of contact should be the party (lender) who reports. It is up to them to send the correct information to the credit bureaus.
These are just some preliminary tips on checking your credit report. If you have a specific question, please feel free to email me at info@drdebt.ca and I will respond either personally or via this blog (anonymously of course)
Posted by Mary Ann Marriott, Haley & Associates Inc. www.HaleyTrustee.ca
The issue of cancelling credit cards that you are not using (or should not be using) is a complicated one.
The advantage of cancelling old cards is that you are not tempted to use them and if you are going to do some type of financing in the near future (mortgage, loan, etc.) the amount of available credit on those cards does not form part of your debt ratio. (Will blog on this one later).
The disadvatage is that your credit score, which is created from several factors, can take a hit. One of those factors is how long you have had credit. The longer, the stronger your score. So, let’s say you have a Sears card that you have had for 20 years (because everyone seems to have had a Sears card starting out with credit), if you cancel that card, you have lost that “length” of credit and your credit score can decrease.
That decrease may or may not affect you depending upon your score to begin with and how long before you apply for new credit, but it is something to be aware of.
A better option – don’t cancel it. Drop the limit an then tuck it away, or, better yet, freeze it in a block of water to avoid impulsively using it. (grin)
The whole credit score system is a bit of a grey area. Watch for future posts as we work through some of the pitfalls, myths and confusion.
As always, if you need specific guidance, ask Dr. Debt at info@drdebt.ca or visit our website for more information.