On May 20th, 2023, Mavis Adu, Director of Operations, held a seminar at the Apostolic Church International Canada. The seminar was about understanding credit scores.
When you have the ability to understand your credit you can improve it. Banks and lending agencies use credit reports, statements and scores to determine your creditworthiness with lenders.
It is important to monitor your payment history. You can use various methods to help you improve this history including making your payments on time and making at least the minimum payment if you can’t pay the full amount that is owed. If you have any problems with paying your bills, you can contact the lender and let them know. If you have any dispute in the amount you owe, you should not skip your payment. Making payments on time is an important way to show you can manage your finances responsibly.
If you want to improve your credit score, you should use your credit wisely. You should try to limit the number of credit applications or credit checks. You can increase the length of your credit history and use different types of credit.
Wise credit use includes not going over your credit limit. Try not to use more than 35% of your available credit limit.Take notice of the payment date, statement date and reporting date when reading your card statement and try to follow them.
Although it is expected that you may apply for credit from time to time, lenders will ask a credit bureau for your report and it is recorded as an inquiry. This is also known as a credit check. If you have too many checks it may appear to lenders that you are either urgently seeking credit or are living beyond your means.
To help control the number of credit checks you should limit the number of times that you apply for a credit card. If you are shopping around for a car or mortgage, you can get a quote from different lenders within a two-week period so that your inquiries will be combined and counted as a single check on your score.
There are two types of credit checks. Both count towards your credit score. Hard hits are checks that can be seen by anyone who views your credit score. These include applications for credit cards, some rental applications and some employment applications. Soft hits still appear in your credit report and affect your score, but only you can see them. Soft hits include you requesting your own report or businesses asking for your report to update their records about their existing accounts.
Your credit score may be lower if you have only one credit product, such as a credit card. It is better to have a mix of different types of credit which might include a credit card, a car loan or a line of credit. Make sure you can pay back any money you borrow. Otherwise, you could end up hurting your score by taking too much debt. If you have paid off a debt, ask to have it removed from your report.
A negative credit score or bad credit can lead to higher insurance premiums, more expensive car loans, higher mortgage rates, steeper apartment competition, added security deposits, unsuccessful job applications or problems starting a new business.
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