Why should you care about credit rating?
It’s crucial to understand the importance of credit and good credit rating. Your credit history begins as soon as you get your first credit card or when you sign up for a cell phone plan. From there you would probably go onto getting your first car loan or line of credit. Your shop around for better interest rates in hope to get the best deal out there. And to do so, you need to have a good credit score as the majority of conventional lenders in Canada, including all the major banks, start with your credit score.
How do you have a good credit score?
Well, now that you’ve started building your credit history, there are several factors that will affect your credit score.
Firstly and probably most importantly, your credit score is based on your payment history, i.e. how long you’ve had a particular financial product, how many payments you have made and how many payments you have missed.
Secondly, the number of financial products you’re currently servicing plays a role in determining your credit score. Sometimes having too many credit lines might negatively affect it as it might be an indicator of a very high debt load. Applying for multiple credit cards or loans in a very short span of time will definitely ding your score quiet a bit.
Another factor to keep in mind when trying to build a good credit history is type of financial products you have on your credit bureau. Term loans are typically one of the better ways to start acquiring credit experience since by obtaining a term loan you are making a commitment to service a loan on a monthly basis.
What lowers your credit score?
Here are a few words on what will definitely worsen your credit score. Things happen and sometimes life events cause you to fall behind on your bills. From the point of view of maintaining your credit score itself, bankruptcy or a consumer proposal is something that you should avoid at all costs as your credit score will be destroyed for many years. That being said, if your financial situation has deteriorated to a point where that might be necessary, you should consult a licensed bankruptcy trustee for advice.
Unpaid collection matters, judgements from creditors, or late payments on your credit bureau are something that will most definitely lower your score but can easily be remedied. For late payments on credit cards for example, simply making the minimum monthly payment will catch you up and keep your score in better standing.
Read also Understanding Your Credit Report
With collection matters, urLoan has solutions to assist Canadians with paying off their bad debts when they don’t have the ability to make a lump sum payment to a collection agency but can afford making monthly payments on a term loan. If you have an unpaid collection matter that you need to take care of and your goal is to remedy your credit score, call urLoan Support at 1-855-723-5626.