Employers Can Check Your Credit
An increasingly common and somewhat controversial practice is taking place as employers check the credit of prospective new employees. The argument for doing this is that employers believe they can use credit history to determine responsibility. Clearly, there are situations where a bad credit history may be due to something completely out of an individuals control, but this is still something to keep in mind.
Why Your Credit History Is Important
Building a good credit history is important for your financial health. If you ever want to borrow money to purchase a house or car, a good credit score can mean the difference between your loan being approved or denied.
There are two main consumer credit rating agencies in Canada: Equifax and TransUnion. These agencies keep your credit history on file and keep track of how you use credit, including credit cards, lines of credit, and mortgages. They also track if you pay your bills on time. Together this information is used to help create your personal credit report and credit score.
So When Should I Buy A Credit Score
If youre simply trying to ensure your credit report is accurate, stick with the report and dont worry about the score. If youre investigating possible identity theft, or recovering after being a victim, you should also stick to the report and dont pay for a score. If accuracy is what youre trying to ensure, dont waste money on a score.
But if youve already verified that your report is accurate and up to date, and you want to evaluate how good your credit really is, you can get a score to see where you stand. Its important to do this check well in advance of taking out a major loan. At least a few months before filling out that loan application, check your score, and if its not as good as it needs to be, take steps to improve your scorepay off overdue charges, pay down balances, make sure everything is accurate and up to date. It may take the creditors a few billing cycles to report the new balances and payments to the bureaus, so you need as much advance time as you can get to see how much your score improves.
See our article on 5 Actions You Can Take to Improve Your Credit Score for more advice on improving scores over time.
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Can Help Consolidate Debts
Another reason having a good credit score is essential is because you can use credit as a backup plan or something to have recourse to when experiencing financial difficulty. In the future, if you find yourself stuck in a difficult financial situation, you may consider taking out personal loans or payday loans to help you consolidate them. Suppose that you have various payment plans or credit cards all at once you may consider taking out a loan from brokers such as Payday UK and using the credit received to pay off all your debts. Resulting in only one loan repayment for you to manage, which you know the interest rate of, and giving you a plan/timeline to become debt-free.
Why Are Credit Scores So Important To Lenders
Why are credit scores so important to lenders? A credit score helps lenders determine who qualifies for a loan and what interest rate, credit limit and terms an individual should receive based on their riskiness. In other words, the higher your credit score, the better the interest rate and perks you can get and the higher the credit limit. A better interest rate means more money in your pocket in the long run since you will pay back less $ in interest. Needless to say, a better credit score means helps you get more easily approved in renting an apartment and qualifying for a credit card.
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Does Voting Increase Credit Score
While voting in elections doesnt necessarily improve your credit score, being on the electoral register will.
The electoral roll is a list of names and addresses of people who are registered to vote. Being on this register makes it easier for you to borrow money because it helps credit companies confirm your identity.
Lenders can also check that the details that you have provided are accurate and minimise the risk of fraud.
How Credit Scores Are Determined
The three major credit reporting agencies in the US are Experian, Equifax, and Transunion. These agencies report, update and store the credit histories of consumers. While there are some differences in the information collected by these three credit agencies, there are five main factors evaluated when calculating credit scores. The borrower must take note of these factors especially if the goal is to increase credit scores faster.
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Review Your Credit Reports
To improve your credit, it helps to know what might be working in your favor . Thats where checking your credit history comes in.
Pull a copy of your from each of the three major national credit bureaus: Equifax, Experian, and TransUnion. You can do that for free once a year through the official AnnualCreditReport.com website. Then, review each report to see whats helping or hurting your score.
Factors that contribute to a higher credit score include a history of on-time payments, low balances on your credit cards, a mix of different credit card and loan accounts, older credit accounts, and minimal inquiries for new credit. Late or missed payments, high credit card balances, collections, and judgments are major credit score detractors.
Good Credit Vs Bad Credit
Having good credit means that you are making regular payments on time, on each of your accounts, until your balance is paid in full. Alternately, bad credit means you have had a hard time holding up your end of the bargain you may not have paid the full minimum payments or not made payments on time.
Negative information generally stays on your credit report for at least seven years.
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Managing Debt Is Best Step
Bad credit is directly linked to debt how much you have and how you pay it.
Paying down credit cards, paying bills on time and reducing your debt to income ratio are the best and fastest ways to improve your credit.
If doing that seems overwhelming, it may be time to consider . Nonprofit credit counselors can review your finances for free and recommend solutions. They may suggest a debt management plan, which can lower credit card interest rates and combine payments into one lower monthly bill. Making an affordable once-a-month payment will have a positive long-term effect on your credit score, because your payments will be on time and your debt load will be reduced.
Dealing with debt issues is the quickest way to increase your income through lower payments for interest, insurance and more. Its the best path to being able to afford an apartment or house, and overall financial health.
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What Is Not Included In Your Credit Rating
There is nothing in your credit rating about your:
- Criminal record
- Lenders cant see declined applications either
Lenders can only see youve applied but not whether you were accepted or not. However, they may be able to guess by examining when your credit accounts were opened.
The information in your credit report is debt-related. For example, if you bought a car on credit, the type of car will not appear in your credit report it will just be the loan itself and the amount owed.
Bankruptcy will appear on your credit rating, while the less serious cases of library fines and parking tickets are not included.
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What If Im Denied Credit Or Insurance Or Dont Get The Terms I Want
Under federal law, a creditors scoring system may not use certain characteristics for example, race, sex, marital status, national origin, or religion as factors when figuring out whether to give you credit. The law lets creditors use age, but any credit scoring system that includes age must give equal treatment to applicants who are older.
You have the right to:
Know whether your application was accepted or rejected within 30 days of filing a complete application.
Know why the creditor rejected your application. The creditor must
- tell you the specific reason for the rejection or
- that you are entitled to learn the reason if you ask within 60 days.
Learn the specific reason the lender offered you less favorable terms than you applied for, but only if you reject these terms. For example, if the lender offers you a smaller loan or a higher interest rate, and you dont accept the offer, you have the right to know why those terms were offered. Read to learn more.
If a business denies your application for credit or insurance because of information in your credit report, federal law says the business has to
- give you a notice that includes, among other things, the name, address, and phone number of the credit bureau that supplied the information.
- include your credit score in the notice if your credit score was a factor in the decision to deny you credit or to offer you terms less favorable than most other customers get.
If you get one of these notices:
Get Credit For Rent Payments
While mortgage payments appear on your credit report, rental payments typically dont, though you can double check with your landlord. If youre a renter with a history of positive payments, you may want to use a service like Rental Kharma or Rent Reporters that reports your payment history to the credit bureaus.
These services typically require verification with your landlord and charge a registration and monthly fee. Rental Kharma has a one-time $50 account setup fee and $8.95 monthly fee, while Rent Reporters charges a one-time $94.95, then a $9.95 monthly fee.
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Why Does A Good Credit Score Matter
A good or excellent credit score will save most people hundreds of thousands of dollars over the course of their lifetime. Someone with excellent credit gets better rates on mortgages, auto loans, and everything that involves financing. Individuals with better credit ratings are considered lower-risk borrowers, with more banks competing for their business and offering better rates, fees, and perks. Conversely, those with poor credit ratings are considered higher-risk borrowers, with fewer lenders competing for them and more businesses getting away with criminally high annual percentage rates because of it. Additionally, a poor credit score can affect your ability to find rental housing, rent a car, and even get life insurance because your credit score affects your insurance score.
What Are Credit Scores And Why Are They Important For Renting
Are you looking to rent an apartment in Montreal? Part of the process will entail signing paperwork including a rental application, credit check, waiver, etc. Although its a common practice in the rental industry, many tenants have questions about credit checks and how to manage credit as a renter.
Fortunately, were here to help! In this post, we will demystify tenant credit checks and tell you exactly what you need so you can move into your next dream apartment in no time!
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How Does Your Credit Score Affect Renting
Think of your credit score as a report card for your finances. Its used to determine how financially responsible youve been in the past. Thats why landlords and leasing agents will run a credit check on potential applicants to help determine their financial situation.
Your credit score will help landlords figure out how likely you are to pay your rent in full and on time throughout the life of your lease. This is an important business decision for the owners of the building.Most people who rent an apartment are looking for credit scores that are no lower than 620. Anything lower than a score of 620 could indicate a high risk of default on rent owed.
A lower credit score could mean youre less likely to be approved for the apartment youre applying for, especially if youre looking to rent in a popular area since the more people who apply the more chance the landlord will pick someone with the highest credit score .
However, a low credit score doesnt mean you wont get approved at all. You can still rent an apartment with poor credit. Thats because some landlords will not base their decision on the exact number associated with your credit score, but on the cause of your bad credit.
You Can Access Perks And Enjoy The Best Rewards
It’s no secret that the best rewards credit cards require at least good credit. And McClary says there are other perks, as well.
With a good credit score, “you can also take full advantage of the best introductory offers and reward incentives on new credit cards,” says McClary. “Some higher tier credit cardholders are able to receive special invitations to exclusive events, free access to online streaming services and even free swag.”
One of Select’s best credit cards for sports fans, movie buffs and adventure seekers is the Capital One® Savor® Cash Rewards Credit Card, which delivers a competitive 4% cash back on dining and entertainment, 3% at grocery stores and 1% on all other purchases. Currently, new cardholders can also earn a one-time $300 cash bonus once they spend $3,000 on purchases within the first three months from account opening.
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Components Of Credit Score
In order to improve or maintain a good credit score it is very important to know the various components of credit score. It is only when you know the potential areas of improvement that you will be able to devise a plan to achieve a better credit score. The following are the main factors of evaluation for credit scores:
- The current debts of the individual
- Duration of time of credit history
- Frequency of applications of new credits
How To Get Good Credit
If you want a good credit score, you need to understand how credit scores are calculated and how to build credit.
Your FICO credit score is made up of the following five factors:
- Payment history: 35 percent
- Length of credit history: 15 percent
- 10 percent
- Recent credit inquiries: 10 percent
If you want to get your credit score into the good credit score range, you need to improve your credit habits as they relate to those five factors.
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How To Build Credit Without Debt
Borrowing money through an installment loan, like a student loan or mortgage, and paying it back over time does help build your credit, but its not your only option. And taking on high-interest credit card debt balances is definitely not the most effective method.
Instead, one of the best ways to build credit is to pay off your credit cards on time and in full each month, and keep a low . Not only will this help you build credit, youll also avoid paying hefty interest rates.
You can also use a service like Experian Boost to report nontraditional recurring payments to the credit bureaus, such as utilities, rent, and even your Netflix payment.
What Credit Scores Are Used For
Banks, building societies and credit card companies use credit scores to work out how risky it would be to lend money to you. They will analyse your score to decide if:
- you qualify for a product
- what interest rate you will pay
- what credit limit to offer
Your credit score will be checked if you are looking for a mortgage, personal loan, credit card or an overdraft on your current account even a student current account.
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Better Terms And Availability On Loan Products
Borrowers with strong credit scores will have access to the most loan and credit card products available since lenders will want to lend to them. They will be able to shop around and compare rates more effectively. They’ll also find the best terms, including higher dollar limits, which can make it easier to finance big purchases.
Use Credit Monitoring To Track Your Progress
are an easy way to see how your credit score changes over time. These servicesmany of which are freemonitor for changes in your credit report, such as a paid-off account or a new account that youve opened. Also, they typically give you access to at least one of your credit scores from Equifax, Experian, or TransUnion, which are updated monthly.
Many of the best credit monitoring services can also help you prevent identity theft and fraud. For example, if you get an alert that a new credit card account that you dont remember opening has been reported to your credit file, you can contact the credit card company to report suspected fraud.
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Why Your Credit Score Is Important
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Your credit scores determine a lot more than the loans you can get and the interest rates you pay. Insurers use credit scores to set premiums for auto and homeowners coverage. Landlords use them to decide who gets to rent their apartments. Credit scores determine who gets the best cell phone plans and who has to make bigger deposits to get utilities.