Upping Your Credit Score
I’ve been getting a ton of questions about credit recently. People, I can’t believe y’all have been using these products to beat the band without having the basic information you need to use them WISELY. Perhaps it’s because credit was just so dog-gone easy to get. Remember when lenders were throwing credit at us? Well, times are tougher (there’s an understatement) and so is the credit world. With all the bruhaha on sub-prime mortgages, and the meltdown in the financial sector in the U.S., a lot of people are wondering if a meltdown in the credit card world can be far behind. And since credit card debt is “callable” – they can demand their money back in full at any time – that could mean a real run on installment credit.
You stand a much better chance of qualifying for any loan and getting a good interest rate if you have a sky-high credit score. If your credit score is not as high as you would like it to be, TODAY is the day to start doing something about it.
First step, get a copy of your credit history and make sure that the information in your credit report is correct. Review your report with a highlighter to identify the factors are most likely having a negative influence on your score, and then work to improve them. Here’s a good explanation of what the various ratings mean.
If you’ve been late with payments, you need to stop doing that. While many utility bills, such as phone, cable and electricity, are not recorded in your credit report, some cell phone companies do report late payments and that will affect your score, as will late payments on your credit cards.
While I constantly tout the importance of not charging anything you can’t pay for, you must, at the very least, pay the minimum amount shown on your monthly credit card statement. To not do so sends a BIG signal that you’re a HIGH RISK borrower.
If you’ve gone over your limit on your credit card, make it a priority to get under your limit. No one will raise your limit while you’re over, and on top of paying a hefty over-limit fee on some cards, you’ll certainly affect your credit score negatively. In fact, you should keep your balance to about 60% of the limit. The closer you are to your limit, the more impact it has on your credit score.
Have you been applying for credit like a mad fool? If too many lenders ask about your credit in a short period of time, it’ll affect your credit score negatively. (Your score doesn’t change when you ask for information about your own credit report.)
If you’re desperate and thinking of hiring a company to repair your credit, don’t. Their ability to change the information on your credit file is no different than yours, so save money you’d pay them and put it toward your debt.
A credit bureau won’t remove accurate negative information from your credit report before the legal time period has expired so don’t buy the bull that there are loopholes credit repair companies can use to remove negative info.
The only way to rectify a poor credit rating is to adopt sound credit practices for a period of time.
BTW: A few people have been asking why they can’t get credit if they don’t have a land line. Simple: it means the lender can’t find you if they need to harass you for payment. Since a cell is mobile, you could move without their records being triggered. Then you’re out of reach and they’re left holding the bag!
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Tags: credit score
September 23rd, 2008 at 6:42 am
This is a timely post! I was actually wondering about the affects of credit yesterday/today.
How does it work when there are two people trying to get an apartment, and 1 has bad credit but the other has good, but both people have to submit records for the application? Does the person with bad credit suck away all the possibilities for the person with good credit?
It was suggested to me that both people need good credit, but how does a person with bad credit live somewhere (if not for a guarantor)?
If anyone has advice or experiences, I would love to hear it before we pay money for our banks to fill out the necessary paperwork and give a certified cheque - there’s no point in us applying if we’ll be denied because of his crappy credit.
September 23rd, 2008 at 9:15 am
Emma
I was in a similar situation when I moved in with my husband. His credit was fine, mine not so much. But we were approved for the apartment before we had to hand over any money. I was lucky in the sense that the head of my bank was willing to fill out the paperwork for free.
I was nervous about being denied, so I went and made an extra payment on my cards, just to lower the debt a bit before they went checking.
September 23rd, 2008 at 10:01 am
Hi there!
Is there any way to get your credit information (rating/score) for free? I visited Equifax and another website, but they both charge a minimum of $15.00 per order.
Maybe I’m just super cheap — I suppose they have employees to pay.
September 23rd, 2008 at 10:24 am
Hi Cat and Emma,
When I applied for an apartment with my fiance (at the time), I had excellent credit and he had terrible credit. They would combine the credit and we would not have been approved, so they took him off the application and solely had me on the lease.
September 23rd, 2008 at 10:45 am
@ Louise — I just received my credit information in the mail today, for free! The only negative to this is they don’t provide you your credit score. But it was still nice to see the information. The only way to check your credit score, as far as i understand, is by paying Equifax. Check out Equifax’s website, they have a mailing address and instructions on how to get your credit report for free!!
September 23rd, 2008 at 10:56 am
Louise - here’s the link to get a free credit report from Equifax
http://www.equifax.com/contact_us/en_ca
Information is on the right hand side of the page.
TransUnion also has a free report by mail. (Credit ratings only not your credit score).
September 23rd, 2008 at 11:07 am
Hi Gail and all of Gail’s fellow fans,
The truth of the matter is that in general, we AREN’T taught basic information about credit. Especially not in high school. Everything I know about credit I’ve learned on my own, either by trial and error, by reading Suze Orman books, watching your show RELIGIOUSLY, and from Oprah’s debt diet program (BTW- another great resource: check it out at:
http://www.oprah.com/subtopic/money/debt).
They get yah early too. I was wooed by my first credit card company at 19, penniless and eating Kraft dinner in university. It’s only by my own personal common sense that I’ve always known to never ever have more then two credit cards, despite the constant “Capital One” applications, and cold phone solicitations. Even my local grocery store Sobey’s is trying to offer me a Mastercard this week (gees, all I went in for was bread and milk). Even with the cards I do have, it’s not that easy reading all the gobly gook legal mumbo jumbo small fine print typed with grey ink, let alone understanding the implications of it in plain English.
I’ve only just received my credit reports for the first time in the mail this summer, but what a run around that was!!! By law, every credit reporting agency has to provide you with one copy of your credit report per year FOR FREE. Which in this day and age of identity theft, is an absolute must do for everyone.
But the websites for both Equifax AND Transunion are really covert and underhanded about it. Unless you are a die hard internet research geek like me, you’d be hard pressed to find the FREE REPORT information web page at all.
They do that on purpose, so that they can convince you up front that you should really BUY it from them for a low monthly maintenance fee- and that’s the darn credit reporting agencies for pete’s sake!!
Bottom line is that the less information you are given, the more likely you will accidentally make a mistake with THEIR products. Which raises your interest rates and increases THEIR profits. Get it? I learned that little trick from the pbs special “Secret History of the Credit Card”- which you can stream video for free (it takes a while to watch, but boy, did it ever open my financial eyes). Check it out at:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/
Gail, that’s why your show and your work is REALLY, REALLY, important for average joe consumers like us. The knowledge you impart gives us a fighting chance leg up on just the sheer education on this stuff. For which all your dedicated fans are grateful!
BTW- here are the correct links I encourage everyone to cut and paste to get you DIRECTLY to the print offs to snail mail for your free credit reports. Warning though, every piece of data this is submitted is used in their data collection, including what you write on the forms. So if they ask you your social insurance number for example, leave it out like I did, as they can still retrieve your credit report without it.
http://equifax.com/ecm/canada/EFXCreditReportRequestForm.pdf
and
http://www.transunion.ca/docs/personal/Consumer%20Disclosure%20Request%20Form%20_en.pdf
you also need the information on this page:
http://www.transunion.ca/ca/personal/creditreport/consumerdisclosure/mail_en.page
Wishing everyone who reads these blogs continued financial empowerment!
September 23rd, 2008 at 11:20 am
So timely! My husband & I just checked all the goods yesterday with Equifax online to see our score and all!
We think it really is the worth the extra money to see it all in black and white, including your credit score and how lenders see you. It’s your info. you really should be aware of exactly what’s on there.
September 23rd, 2008 at 9:31 pm
It’s as easy as making minimum payments and paying bills before the due date? Wow.
I applied for a pre-approved mortgage a while ago (I didn’t even end up using it because I stayed put.) and the guy obviously checked my credit report before answering if the amount I was asking for would be available.
He laughed at me! Right there on the phone he laughed so hard that he snorted! “Of course!”, he said “You have the best credit score I have ever seen for someone your age!”. (Of course he didn’t say what the score was).
I never knew how I got such a good score, untill now.
Gail you have helped me figure it out! I have had a continuous Visa for 18 years all balances paid off regularly, I’ve only bounced 3 checks in my life, and quickly fixed it. I try to pay off loans before their terms and I’m not late on bill payments (except the one I lost and forgot about it until the next month).
My husband isn’t QUITE as anal about bill paying as me, but I imagine his score is pretty good too as we have very simlar money handling styles.
LOL — I just read what I wrote, it sounds like I’m bragging!
September 23rd, 2008 at 10:22 pm
Maintaining a good credit score is not difficult.
I never miss a payment, never go over my limits, have never bounced a cheque and try not to have too high of a ratio between used credit to available credit. I recently got a HELOC and the lender told me my credit score, which was 740, though I suspect it may have gone up a bit in the last few months as my used to available ratio has gone down.
I probably should write and get my report mailed to me as I haven’t gone over it with a fine toothed comb in quite a while and am over due.
October 4th, 2008 at 12:33 pm
..]In a recent study of 50,000 couples who went through its marriage preparation course, Life Innovations finds “a large percentage of partners don’t talk about money or credit issues in any detail at all,” says Peter Larson, clinical psychologist and vice president of the Minneapolis firm…]