Credit Management
What do I need to do to keep track of my credit situation?
You need to know your credit rating and monitor it once a year. In addition, you need to use credit wisely and pay off all debts on time. Avoid making minimum payments due on your monthly balance. Make certain that you choose the right credit card which meets your financial needs.
How do I use credit wisely?
Credit can be a valuable ally when used correctly. It allows you to take advantage of opportunities when they present themselves. The use of this credit must, however, be carefully and closely monitored. There are specific actions that you should take to make certain that you are using this credit wisely including paying off your credit card balance every month and not just making minimum payments but making all payments on time. You should also know your credit rating and monitor it as it will affect your financial situation.
What are credit ratings?
A credit rating is like a report card on your borrowing habits. Your rating contains a number and a letter. The number is between 0 and 10 with the best rating being the lowest number which means you pay bills quickly whereas a 9 means you never pay them off. The letter indicates the type of credit you tend to use: “R” standing for revolving and it is the most common. Credit cards will give you an “R” rating. “I” stands for instalment such as leasing. “O” means open like a line of credit. There are charts that provide more details.
What affects a credit rating?
Your borrowing record is the primary determinant of your credit rating. If you pay your debts regularly and on time you will likely have a good credit rating. If you miss payments or are late in paying you will likely have a poor rating.
How do I check my credit rating?
You must order separate copies of your credit rating and credit report. There are two major credit-reporting agencies in Canada – TransUnion and Equifax.
How can I improve my credit rating?
You can start by paying your bills in full and on time. Avoid incurring unnecessary additional debt and pay off your debts as quickly as possible. If you have a low score it could be because you do not have a proven credit record. If you use a credit card wisely and pay off your account in full and on time on a regular basis your credit rating should improve.