Credit cards can help you build your credit or can also damage your credit if not used properly. Here is some important information to remember when using credit cards. Learn more about about your credit rating.
Whether you apply for a loan, sign up for a credit card, or request utilities service for a new home, someone is going to check up on your credit rating.
What is a credit rating and who tracks it?
Two services - Equifax and TransUnion - compile your history of using credit granted by the various companies you deal with and score your reliability in paying it back.
How does the information get collected?
The fine print in each loan or account application you sign authorizes that company to provide data to a credit reporting agency. The agency maintains a file that other vendors can check whenever you apply for credit. You're entitled to a free annual report that details the information on file and identifies the organizations that have checked your record.
Why does my credit rating matter to my daily life?
Credit ratings are key to whether you can get a loan, rent an apartment or open a utility account without posting a deposit. Your report will explain how to correct any inaccuracy. Even if adverse information is correct, you can add an explanation. Credit ratings can also influence the interest rate on loans, so maintaining a good score can help save money.
Think twice before accepting a credit card offer.Don't apply for credit cards you don't intend to use, advises the federal Financial Consumer Agency of Canada. The number of credit cards you hold affects your credit score used by lenders when considering a loan request. Check out the
FCAC website for interactive tools aimed at helping consumers use credit cards wisely, along with helpful information about credit reports and scoring.
Keep your credit card balances in the black.
About 55% of Canadians carry an outstanding credit card balance at least once a year and thus incur interest charges, according to a survey conducted for Credit Canada, the national association of non-profit debt counselling agencies. Of those who owe, 14% pay interest for six months and 6% say they never get out from under their debts.
If you're carrying credit-card debt and would like to reduce this to put more money toward your long-term goals, let's meet. Credit can be a useful tool for managing expenses if it's used wisely and you can avoid paying more interest than necessary.
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