What You Should Know About Credit Scores and Debt NowAug 29, 2018
What’s your credit score? How’s your credit history? How is your debt affecting your credit score?
If you don’t know the answers to those questions, it’s time to find out.
This podcast is about resolutions and renewal. We’re talking about the four financial resolutions to make this September. Specifically, we talk about reducing your consumer debt, planning a savings goal, learning about a new money topic or skill, and talking about money.
Learning about your credit score can be your September resolution. And looking your credit score, and your credit history right in the face can help you decide how to change your debt behaviour, too.
What do you know about your credit score?
The numbers are in: in a recent Capital One study, we learned that only four out of ten Canadians know their credit score. That means 60 per cent of Canadians are partially financially blind!
And with barely over 20 per cent of surveyed Canadians doing regular credit report checks, Canadians are risking their financial security.
Your credit score and credit history are full of useful information. They can help you reform your financial behaviour. Seeing how long your consumer debt lasts and how it can affect your credit score can be the reality check you need to start changing certain things.
Use your score as motivation to reduce your debt. If you have a growing family, you know the importance of having healthy finances that allow you to be flexible. Expenses like sports, travel, and all the normal local family treats and adventures can quickly rack up consumer debt. Have you thought about post-secondary costs? All of that is easier to manage if your credit score is healthy and your debt levels low.
Quick facts about credit scores
- Your score can be impacted by others — and you could be impacting someone else’s score, too. If you’ve co-signed a loan, share a credit card or line of credit, or share payments on a vehicle or mortgage, your credit scores and your behaviour are linked.
- The rule of 35: This rule recommends that you keep your in-use credit below 35 per cent of your limit. If you are using more than 35 per cent of your credit amount, you could be identified as a risk to lenders as it signals you might need help with your debt.
- Credit scores are sensitive creatures. Even small miss-steps like a late payment can bring your score down. With as many monthly bills as most Canadians are juggling, it can be easy to forget about one, or get the date wrong.
- You should check it regularly. Check your credit score at least once a year. You can receive your score for free to review your history and make sure there are no mistakes. Credit monitoring can help you identify suspicious activity quick, too.
Your credit score and credit history can work in your favour. If you manage your debt well and keep your debt levels low, and focus on paying debt down quickly, your score will reward you. Learn all you can now to keep your finances healthy.
Read more on myths about credit scores from My Money Coach to help you become a credit score expert for yourself.
For more information on credit scores and financial resolutions, tune in to our Podcast.