YourCreditReport.ca: credit reports, credit cards, fixing your credit and personal bankruptcy in Canada » credit score

How to Use a Credit Card to Build Your Credit Score

info — Wed, 13 Oct 2010 23:42:58 +0000

Credit cards aren’t the only way to establish your credit history, but they are usually the easiest way to create a credit history because it is usually easier to open a credit card than other forms of credit such as a car loan or mortgage (lenders are less likely to lend that much money to someone who doesn’t have any credit history).

Once you have established a line of credit, your actions are reported to the credit bureaus which begin recording your credit history on your credit report. Over time, your actions will be used to determine your credit score. Here is more information about the difference between credit report and credit score.

Click here to apply for a credit card for those who have poor credit and are interested in improving their credit.

No credit or poor credit?

If you are having trouble getting approved for a credit card, then you should check out secured credit cards, which require a deposit and sometimes come with an annual fee. The deposit works as collateral for your charges and if you don’t make on time payments, the bank will use your deposit to pay your charges. Secured credit cards cost a little more than traditional credit cards, but they often come with guaranteed approval and with proper use will help you improve your credit score. After proving your ability to make payments, you can often upgrade your secured credit card to a non-secured card that has a better interest rate and doesn’t come with annual fees.

Important notes about building credit with a credit card

Getting a credit card can help you build your credit so long as you treat it responsibly – otherwise you are only going to hurt your credit score. Credit cards can be a trap for some people, so it’s best to make sure you only make charges you can and will pay in full each month. Otherwise you may find yourself getting into a cycle of debt that is difficult to escape from.
Tips to establish your credit and increase your credit score:

Understand how your credit score works
Only charge what you can pay with cash
Pay your full credit card bill each month
Repeat the process
Add time

The key to establishing a good credit history and credit score is being able to prove that you are responsible and can continually pay loans that you receive. There is no silver bullet to improving your score quickly; it takes time and commitment.

The following URL will direct you to resources for applying for a credit card for those with poor credit and trying to improve credit. Click here >>

What Is a Good Credit Score on your Credit Report?

info — Fri, 01 Oct 2010 18:20:47 +0000

Ask a bunch of different people about what they think is good credit score on their credit report and you’ll get a different answer from everyone and from every possible perspective. Fortunately, when it comes to the topic of a good credit score, there’s a defined range of numbers on which everyone from creditors to consumers are in agreement.

We’re talking about the kind of good credit score that saves you money through lower interest rates, inspires lenders to smile when you sit down at their desk, and makes it easy for you to get credit when you need it. We’re not talking about a credit score that’s good enough to get a credit card and a cell phone contract.

Here is some information to help put your credit score concerns in perspective. Credit scores range from 300 to 850, with 300 the absolute lowest and 850 the almost unattainable maximum. Even the heads of the credit bureaus don’t have 850 credit scores, so I don’t think you’ll need to worry too much about not achieving the perfect credit score.

Here’s a reliable range of good-to-excellent credit scores:

680 to 724
Good. Any score in this range should be to your advantage when shopping around for an affordable interest rate on a mortgage, car loan, or other type of loan.
725 to 759
Very good. Your score isn’t quite excellent, perhaps because you have an error in your credit report, or maybe because you were late on a car payment a few years ago. A credit score in this range is still quite good, though, and getting credit should be easy.
760 to 850
Excellent. A credit score in this range means that you’ve been very proactive and conscientious about your credit management. You can expect lenders to welcome your credit inquiries, and you can negotiate for their best rates from a position of strength.

If your credit scores fall somewhere beneath this scale, don’t despair; it merely gives you a goal to work toward. Any one of a number of things could have happened, including things like plain bad fortune (medical emergency), which caused your score to fall beneath the range of a good credit score. Start your credit score recovery by getting current copies of your credit reports, looking them over carefully for mistakes, and researching ways to improve your scores. It won’t happen overnight, but the sooner you get started, the sooner you’ll have a good credit score that works for you instead of against you.

Bankruptcy and Its Effects on Your Credit Score

info — Sat, 12 Jun 2010 03:41:59 +0000

The financial world is definitely experiencing ups and downs. Hence, there are inevitable financial circumstances that many people are faced with which is resulting more and more in personal bankruptcy.

Personal bankruptcy refers to the debt management tool which is generally considered the last resort because of its long-term and far-reaching affect on your personal finances. In fact, when you arrive at the decision that you are bankrupt, this record stays in your credit score for as long as seven years. However, since you already have a compromised credit report and rating (otherwise you wouldn’t be declaring bankruptcy), it is imminent that you will experience a great number of future financial consequences.

There are, however, other components you need to know about personal bankruptcy that are equally salient and gives major effects on your finances and credit standings. These are the two kinds of personal bankruptcy that most often affects credit report.Reorganization

When you declare that you are financially broke, there are still certain properties and assets that you tend to keep due to value. This includes your house or car and otherwise there is a great possibility that you would lose these precious investments should you not decide to protect them. Reorganization allows you to pay off your mortgage or default in approximately three to five years. This is the other option you could persue when you are bankrupt rather than surrendering properties. This is a legal option and is also known as chapter 13 bankruptcy.

Straight Bankruptcy

This type refers to the liquidation of all assets which are generally not exempt property that may include basic household furnishings or work-related tools. In this case, some of the properties you owned will be sorted out and sold by an official appointed by the court or it could be turned over to creditors. This is known as chapter 7 and you can only file this once every six years.

The Imminent Effects

People who file for bankruptcy are bound to experience innumerable difficulties in terms of their finances in a given period while the mark remains on their credit score. First and foremost, it would be extremely difficult to get and be approved for any other type of credit. Most creditors or lenders require submission of credit report as a basis of your eligibility and once they see that you have recent bankruptcy records, rest assured you have the lowest chances to get approved for a credit or loan. There are some options, such a secured credit card which allow for a glimmer of hope of re-establishing ones credit once released from bankruptcy.

Bankruptcy also affects your capacity and credibility to buy a house in the future. Applying for home mortgage is extremely difficult because of the tedious requirements and criteria, which are getting increasingly more difficult for everyone. Mortgage providers will consider you a liability more than an asset especially if you have previous records of being financially broke and this will clearly show in your credit report. You may also find difficulty in getting a life insurance, finding employment and the lingering stigma is likewise inevitable.

Being bankrupt is an extremely tough situation. Speaking persosnallu, one simply needs to remain diligent and strong when going through bankruptcy and emerging from the other end of being released. The bringht side is that you are given a fresh start to make amends and rebuild your credit history.

Consumers Beware: Applying for Credit Can Torpedo a Credit Score

info — Fri, 21 May 2010 21:44:58 +0000

One of the most common and detrimental errors that consumers make in regard to their credit score may also be the most innocent mistake of all.

Without even realizing that they are doing anything wrong, millions of Americans each year inadvertently sink their credit scores by a significant amount just by applying for credit cards and loans.

While filling out credit card or loan applications may seem harmless enough, it involves having a bank, lender, or merchant “run your credit” or check your credit report to ensure that you are worthy of having credit extended to you. But just by doing so, those who check your credit may also be influencing your all-importantcredit score in an adverse way that could result in your being denied credit in the future.

Many unsuspecting people, for example, apply for department store charge cards each and every time a clerk offers those along with an attractive discount at the point of purchase.

Walk into any busy shopping mall during a major holiday weekend, for instance, and the chances are pretty high that someone will ask you to sign up for a retail credit card during a special store promotion. If you agree to fill out the application they’ll give you a free gift – like an umbrella, a toaster, or a tee-shirt. Or they may offer you a 10 or 20 percent discount on your first purchase.Perhaps you’re traveling, and as you walk through the airport someone offers you a new frequent flier card. All you have to do is sign up for it and they’ll give you enough bonus reward points to take a free trip. Passengers even encounter this kind of offer while flying, because flight attendants will sometimes hand out frequent flier credit card applications while en route to a destination.

Sign up and get a free trip, a gift, or a discount, they explain. Plus the offers sound rather attractive and usually make good financial sense – at least on the surface. They run your application through a computer – which checks your credit history or score – and if you have good credit you are almost instantly approved and you walk away with a bonus gift or perk.

That probably makes you feel more confident about your ability to borrow, and it should. But it makes lenders more wary and skeptical. While that may seem ironic or downright unfair, it’s a fact of life – and one that you should be aware of if you are interested in preserving and protecting your credit score.

Here’s why that is – and how applying for credit cards or loans can be bad for your credit score:

Credit reporting agencies calculate credit scores based on a variety of factors that are meant to help predict how risky it might be to lend you money. These are translated into a mathematical ranking system.
The banks and other financial services institutions who are their clients rely on these scores to help them decide who is credit-worthy. If you have great credit you can get loans easily and at preferential discount rates. A low score, on the other hand, makes it harder – if not virtually impossible – to get a reasonably priced loan.
Applying for credit frequently – unless it is done within a relatively short timeframe – is one of the consumer behaviors that appears risky to banks and to credit reporting agencies.
They assume that if you are filling out lots of credit applications all year ‘round that it means that you are having trouble getting a loan, and the more applications you fill out the more desperate you appear to be.
So each time a company checks your credit report because you have applied for a loan or a credit card, that event is noticed and documented.
People in the credit industry refer to it as a “hard hit,” and a pattern of frequent hard hits over an extended period of time will add up to an injury in the form of a lowered credit score.

But that does not mean that you should never apply for a loan or a credit card. Credit is a really useful resource, and loans can really come in handy when you need to make a special purchase or otherwise manage your finances with some additional cash on hand. It just means that now that you understand how the system works you should keep that in mind and avoid the practice of unnecessarily filling out applications.

The first step is to gain as much knowledge and information as you can about how the credit industry operates.
Take advantage of free consumer education resources at sites like Quizzle.com, where you can track your credit history and credit score for free (without a negative impact on your score). They’ll also help you monitor your credit and have tools that offer you protection from identify theft and other nefarious attempts to use your credit unlawfully.
Instead of applying for credit cards or loans on a frequent basis, for instance, spend more time comparing those financial products to pick the one that’s most attractive for you. That way you can just apply for loans that you really want.
The same goes for credit cards or department store charge cards. Control the impulse to apply every time someone offers you a discount or perk, and instead only apply when you really need a loan or card.
Plus, only do it then after you’ve conducted an investigation to find out who has the best deal in town – or the most valuable rewards and bonus perks.

This strategy will protect your credit so that when you do decide to apply for a loan or a credit card you’ll have cleaner credit report and a higher credit score. Those qualifications ensure a smoother credit application process and a more successful outcome to get you the most affordable loans.