We all know that we need to be careful with credit – because it’s easy to borrow money, and wind up owing as much, or more than we can pay. We all know what it feels like when there’s “too much month left at the end of the money”.
And there’s this vague fear of a negative impact on our credit history that can affect us in the future. The more we know about credit reporting, the more we can work to improve the way potential lenders see us, and then we can leverage a good report to get favourable terms when we borrow money.
What is a Credit Score?
In Canada, a credit score is assigned by one of the two large credit reporting agencies – Equifax or TransUnion. The score is a number between 300 and 900 (900 being perfect) that represents the aggregate of all of the information that the bureau has on file about us. Most interactions that you have with lenders, either positive (payments made on time) or negative (late payments, collections, bankruptcy) will affect our score. Anyone who has ever accessed any form of credit has a file with the credit bureaus. Potential lenders use your credit score, with your permission, to determine whether or not you qualify for credit, and sometimes they use it to set the terms of borrowing (interest rates, etc.).
Who Can Access My Credit Report?
Any lender can provide information about your loan, payments, etc. to the credit bureaus. You give them permission to do so in the agreement you sign when you begin to access credit with them. Any potential lender with your permission (usually in the application) can access your report and score. You can (and should) access your own credit report with both bureaus. Make sure that all of the information that they have on file is accurate.
By knowing your own credit score, you can demonstrate to potential lenders that you are a responsible borrower. You may be able to negotiate more favourable terms as a result.
Creditaid President and CAICCA Vice Chair Brian Denysuik was recently interviewed by The Province on the need for the BC government to adopt changes in their debt management legislation. The province has the highest rate of consumer debt in the country but current legislations leave consumers open to financial harm and loss of funds from debt settlement companies during their most vulnerable times.
Changes to the Manitoba legislations were made in 2012 and Brian comments on how those changes were instrumental in protecting Manitobans from scams. “The changes around debt settlement here in Manitoba…have worked very, very well. I think the legislative changes have helped protect consumers. I fail to understand why BC has not done the same thing.”
“Before the Manitoba government changed that province’s regulations in February 2012, ‘we were seeing a lot of people get trapped into working with these organizations, where they had turned around and they had sent them a whole bunch of money, only to be sued, only to find out that they’d been scammed,’ Denysuik said.
Denysuik said in recent years, his office has heard from far fewer upset, distressed consumers who claim to have been scammed by shady debt settlement companies.”
Read the full article on The Province, originally posted on August 22nd, 2014. Click here to be redirected to the article.
It was always Jessica’s* dream to run her own business. She had spent her childhood in a small town and loved the sense of community she felt living there so when it was time, it was an easy decision for her to pick the location for her business.
She ran a small convenience store and business was great. Her prime location and loyal customers made the business a success. Her dream had come true.
An advantage of running a business in a small town is that competition is limited. For a long time, the big retailers never even considered entering Jessica’s town. But the town grew and then one day, the big retailers came.
The business started to change. Business dropped and even the loyal customers couldn’t resist the low prices and convenience the big retailer offered. Jessica’s over-extended line of credit became the working capital and pretty soon, her multiple credit cards were maxed out. Her own income disappeared at a time when she needed it the most. Every month became a juggling act of making rent and minimum payments. She was afraid to answer the phone, open her mail or even see her family and friends for fear they would ask how business was going.
Financially, Jessica knew she was in trouble but the hardest part was accepting that she had to let go of her dream. The mounting debt and the stress of trying to figure it all out by herself finally made her ask for help.
When debt starts mounting, the situation can quickly spin out of control. To avoid a speed debting problem like Jessica’s, talk to the counsellors at Creditaid.
Are you afraid to check the mail for fear of seeing your credit card bills? Especially during this time of the year, we understand how credit card balances can be overwhelming. Give us a call and we will help you, every step of the way to becoming debt free.