How is your credit and why do you care?
Credit is easy to get but very difficult to fix if you abuse it. A poor credit rating or delinquency stays on your file for 7 years. Make sure you understand credit and set yourself up for success.
Your credit rating is called a beacon score. Beacon Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your score.The Scores range from 300-900 with 680 plus being goal!
- Account payment information on specific types of accounts (credit cards, retail accounts, instalment loans, finance company accounts, mortgage, etc.)
- Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
- Severity of delinquency (how long past due)
- Amount past due on delinquent accounts or collection items
- Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
- Number of past due items on file
- Number of accounts paid as agreed
- Amount owing on accounts
- Amount owing on specific types of accounts
- Lack of a specific type of balance, in some cases
- Number of accounts with balances
- Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
- Proportion of instalment loan amounts still owing (proportion of balance to original loan amount on certain types of instalment loans)
Length of Credit History
- Time since accounts opened
- Time since accounts opened, by specific type of account
- Time since account activity
- Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
- Number of recent credit inquiries
- Time since recent account opening(s), by type of account
- Time since credit inquiry(s)
- Re-establishment of positive credit history following past payment
Types of Credit Used
- Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, instalment loans, mortgage, consumer finance accounts, etc.)
- Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score.
- If you have no credit you can apply for a secured credit card. That is where the bank hold $500 on deposit as security. They then give you a credit card with a $500 limit. As you use this card and make your regular payment you will prove you are credit worthy and the bank will remove the security and issue you a regular credit card.
- Another good way to establish credit is to get an RRSP loan and then pay it off in a year.
I have been working in credit since 1988 so I would be happy to discuss your personal situation anytime, cheers