本文发表在 rolia.net 枫下论坛For years, cash was king. Paying with cash was a sign of success and stability. Not any more.
Today, cash looks suspicious. It suggests that you couldn't qualify for credit, or perhaps that you engage in some illicit activity and are afraid of leaving a trail.
Credit now wears the crown in Canada. Today you need a good credit rating to buy a home, lease a car, find a good job or receive a preferred rate on homeowner's or life insurance.
A key financial task
That makes establishing credit and monitoring your credit rating one of the most important financial tasks you face. Fortunately, it's not difficult. But it's just as easy to start off on the wrong foot if you don't know the rules.
The first step is to see where you stand. That means getting a copy of your credit report. There are two major credit-reporting bureaus; Equifax Canada and/or Trans Union of Canada. Unfortunately, they both don't necessarily have the same information. That means there is no way to make certain that you have a clean record unless you check both. Make a note on your calendar to check your report every couple of years.
Getting a good credit rating
To establish good credit, start with one major credit card, such as American Express, MasterCard, Visa or Canadian Tire, and pay your bills on time. That means before the due-date on the bill.
Sadly, simply paying your bills on time isn't enough anymore. The electronic age has made the credit approval process an impersonal one. Whether you get the loan you want often depends on how a computer scores your application.
Do not wait until you need credit to get your report. The worst thing that could happen is that you are turned down for the new car loan, apartment lease or mortgage on your new home, only to discover that the credit bureau information is inaccurate. By the time you have the record corrected, it may be too late to complete your original transaction.
Steps to achieving a high credit score
Credit issuers have broad leeway to develop their scores, provided they don't discriminate against people because of sex, race, age, religion or national origin. A credit issuer may use age as a criterion of a scoring system if, for example, past experience shows that those in a certain age group are less likely to pay their bills.
That's what credit scoring is -- a compilation of the lender's experience in issuing credit, translated into a scoring system. For that reason, it can be difficult to know precisely how any one lender will judge you. But here are some of the characteristics that will help you post a better score, according to credit consultant Gerri Detweiler.
1. Paying your bills on time
That still counts. Paying even a few days late puts you in a different category. Ditto with the mortgage payment. Many mortgages offer a grace period of a few days after the due-date before your payment is officially late. But for scoring purposes, if you've not paid by your due-date, you're late.
2. Own only two to four credit cards.
Less is bad, but so is more, according to most scoring systems, says Detweiler.
3. Keep both a chequing and savings account.
If you have neither, you'll hurt your score.
4. Keep your debt-to-income ratio under 20 per cent.
5. Make infrequent requests for additional credit.
Your credit file registers the inquiries that have been made about you from credit issuers. If there have been more than four over the last year, that's a strike against you, according to Detweiler.
6. Stay put.
If you've been in your current home for four years or longer and with your current employer for five years or more, you help your rating.
Lenders also look at your spending behaviour. For instance, how close are you to the limits on your various cards? How many cards do you use? What do you carry in balances? Most of this information is routinely supplied to credit bureaus by your credit card issuers.
If your report contains errors, write to the credit bureau immediately and explain what's wrong. For example, suppose your record indicates that you have an account at Canadian Tire that is overdue, but you have in fact paid that account and owe nothing. In your note to the bureau, be specific: 'I paid out my Canadian Tire account in 1994. The balance is paid off.' If you are in a hurry to get the matter cleared up, you might write to the creditor as well.. The creditor can send a letter to the credit bureau confirming your actual account status.
Many of the things that count against you are obvious: late payments, court judgments, an account that was turned over to a collection agency and, of course, bankruptcy.
According to Detweiler, there are pros and cons to the credit-scoring system. On the plus side, it eliminates discrimination because approval is based on raw numbers. However, the scores don't take into account consumers who have exceptional circumstances. If a score is too low, an applicant is turned down. Ultimately, you have to understand how it works if you're going to make it to work for you.
Based on an original article by Mary Rowland.
Copyright 2001 Microsoft Corporation. All rights reserved.更多精彩文章及讨论，请光临枫下论坛 rolia.net
Today, cash looks suspicious. It suggests that you couldn't qualify for credit, or perhaps that you engage in some illicit activity and are afraid of leaving a trail.
Credit now wears the crown in Canada. Today you need a good credit rating to buy a home, lease a car, find a good job or receive a preferred rate on homeowner's or life insurance.
A key financial task
That makes establishing credit and monitoring your credit rating one of the most important financial tasks you face. Fortunately, it's not difficult. But it's just as easy to start off on the wrong foot if you don't know the rules.
The first step is to see where you stand. That means getting a copy of your credit report. There are two major credit-reporting bureaus; Equifax Canada and/or Trans Union of Canada. Unfortunately, they both don't necessarily have the same information. That means there is no way to make certain that you have a clean record unless you check both. Make a note on your calendar to check your report every couple of years.
Getting a good credit rating
To establish good credit, start with one major credit card, such as American Express, MasterCard, Visa or Canadian Tire, and pay your bills on time. That means before the due-date on the bill.
Sadly, simply paying your bills on time isn't enough anymore. The electronic age has made the credit approval process an impersonal one. Whether you get the loan you want often depends on how a computer scores your application.
Do not wait until you need credit to get your report. The worst thing that could happen is that you are turned down for the new car loan, apartment lease or mortgage on your new home, only to discover that the credit bureau information is inaccurate. By the time you have the record corrected, it may be too late to complete your original transaction.
Steps to achieving a high credit score
Credit issuers have broad leeway to develop their scores, provided they don't discriminate against people because of sex, race, age, religion or national origin. A credit issuer may use age as a criterion of a scoring system if, for example, past experience shows that those in a certain age group are less likely to pay their bills.
That's what credit scoring is -- a compilation of the lender's experience in issuing credit, translated into a scoring system. For that reason, it can be difficult to know precisely how any one lender will judge you. But here are some of the characteristics that will help you post a better score, according to credit consultant Gerri Detweiler.
1. Paying your bills on time
That still counts. Paying even a few days late puts you in a different category. Ditto with the mortgage payment. Many mortgages offer a grace period of a few days after the due-date before your payment is officially late. But for scoring purposes, if you've not paid by your due-date, you're late.
2. Own only two to four credit cards.
Less is bad, but so is more, according to most scoring systems, says Detweiler.
3. Keep both a chequing and savings account.
If you have neither, you'll hurt your score.
4. Keep your debt-to-income ratio under 20 per cent.
5. Make infrequent requests for additional credit.
Your credit file registers the inquiries that have been made about you from credit issuers. If there have been more than four over the last year, that's a strike against you, according to Detweiler.
6. Stay put.
If you've been in your current home for four years or longer and with your current employer for five years or more, you help your rating.
Lenders also look at your spending behaviour. For instance, how close are you to the limits on your various cards? How many cards do you use? What do you carry in balances? Most of this information is routinely supplied to credit bureaus by your credit card issuers.
If your report contains errors, write to the credit bureau immediately and explain what's wrong. For example, suppose your record indicates that you have an account at Canadian Tire that is overdue, but you have in fact paid that account and owe nothing. In your note to the bureau, be specific: 'I paid out my Canadian Tire account in 1994. The balance is paid off.' If you are in a hurry to get the matter cleared up, you might write to the creditor as well.. The creditor can send a letter to the credit bureau confirming your actual account status.
Many of the things that count against you are obvious: late payments, court judgments, an account that was turned over to a collection agency and, of course, bankruptcy.
According to Detweiler, there are pros and cons to the credit-scoring system. On the plus side, it eliminates discrimination because approval is based on raw numbers. However, the scores don't take into account consumers who have exceptional circumstances. If a score is too low, an applicant is turned down. Ultimately, you have to understand how it works if you're going to make it to work for you.
Based on an original article by Mary Rowland.
Copyright 2001 Microsoft Corporation. All rights reserved.更多精彩文章及讨论，请光临枫下论坛 rolia.net