Monday, February 06, 2012
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Understanding and Managing Your Credit
Credit is the driving force of our economy.  It finances our homes, our vehicles and our vacations.  It also helps us to pay for things like appliances or hotel rooms.  In short, for many people, credit is "the good life".
 
Credit allows you to carry less cash or rent a car without a lot of hassles.  Credit is the only way you can purchase items online at retail websites or to buy airline tickets.
 
Credit is neither good nor evil... it just depends on how you use and manage it.  The misuse of credit can ruin your financial health or destroy your self-esteem, marriage and your entire life while proper use of your credit can make all your dreams come true!
 
Basically, credit is a promise to pay for something in the future that you receive in the present... for example - a mortgage is a type of credit.  A mortgage allows you to make a very large purchase that you otherwise would not be able to pay upfront.
 
Having good credit is a necessity in today's world, yet millions of Canadians are turned down for loans, mortgages and credit cards every year.  Although some people purposely or fraudently abuse credit, the majority just don't know how to manage their credit properly.  In some cases it is just a matter of education and practising good credit management techniques.
 
This section will teach you about credit and what drives your credit history.  We will share with you the knowledge gained by working many years in the mortgage and credit industry.  We will show you how to build your credit to a credit score well over 700, which will help you save thousands, if not hundreds of thousands of dollars in your lifetime!

  

Do You Need Help Now?

Here are some common warning signals which, if corrected in time, can help you steer clear of financial disaster:

  • Spending increasing amounts of your income to pay your bills;
  • Putting off paying your bills for a few days because you don't have enough money to cover them;
  • Being near, at or over your credit limit on your credit cards or personal line of credit;
  • Being turned down for credit because your debt-service ratios are over recommended guidelines;
  • Making only minimum payments on your bills;
  • Juggling your bills by paying minimum monthly payments with another credit card;
  • Using your credit card for small expenses because you don't have enough cash to pay for them;
  • Paying bills with money which was supposed to go for something else;
  • Using credit to pay for normal living expenses;
  • Using savings accounts to pay your bills;
  • Have no savings;
  • Having your credit cards cancelled by the issuer because you have been consistently over your limit or a slow payer;
  • Had your auto or life insurance cancelled because you can't afford them;
  • Putting off medical visits because you can't afford them;
  • Working overtime or two jobs to have extra cash;
  • Receiving utilities shut-off notices;
  • Being overdrawn at the bank;
  • Worrying a lot about money;
  • Arguing with your spouse about money problems;
  • Being afraid that someone can find out how far in dept you are.

If you answered yes to one or more of the questions, you may or may not have cause for alarm.  Depending on the context of your answers, however, if you are drawing down your savings to make minimum monthly debt payments, or not having enough to make all your payments, then the alarm bells should be ringing loud and clear.

Don't despair.  If you are a homeowner, our Credit Specialists may be able to do a debt consolidation that will put your affairs in order - and give you the tools to re-establish good credit.  You will take control of your finances and be well on your way to financial stability.  The key is to act quickly before your credit worthiness has been destroyed.

 
  
Know Where You Stand - Now!
There are a number of ways for you to build a good credit score, but before you get started, you will need to obtain a copy of your credit report.  How can you rebuild your credit if you don't know where you stand in the first place?
 
Once you have your credit report, check it for unpaid collections.  One of the best ways to get your credit rating headed in the right direction is to begin with paying off your bad debts. 
 
You can obtain a free copy of your credit report simply by contacting Equifax National Customer Care Centre at 1-800-465-7166 or by visiting www.equifax.ca.
 
Credit scoring has an enormous impact on your financial picture.  It can mean the difference between getting a good interest rate on your mortgage or car loan, or whether you even qualify for a loan at all.  It is therefore imperative to be well-versed on the factors that influence your credit score, and have the ability to take simple, yet very important steps to clean up your credit. 
 
We all know that good credit translates into lower rates for consumers and you need to know how to work the system to your advantage, and have a plan in place to get a better deal when things don't immediately fall into place for you.

  

Understanding Your Credit Bureau is the First Step to Establishing Good Credit

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