Although most people are aware of the existence of the credit file (or the credit report on which it is based), very few know what it is for and how to ensure that that their credit file remains in good standing. Find out what it consists of and why it is important to maintain a good credit rating and consult Poupart Syndic Inc. for their advice on how to achieve an impeccable record.
A credit file contains various information about your financial health, your personal and credit information (credit card and line of credit, loans, mortgages and outstanding debts) and your banking information. Your credit file also includes public information about you (your bankruptcies, if any, or any lawsuits against you or judgments rendered), and also lists the people or institutions that have consulted your file.
You will be rated on the basis of a score ranging from 300 to 900. The higher the score you are given (600 or more), the better your financial health. As for the credit rating, it falls between 1 and 9. A rating of 1 indicates that the account is paid on time, while a rating of 9 indicates that the account is in bankruptcy or in arrears. You should be aware that the information on your file is kept for a period of 6 to 7 years, and that this period could extend to 14 years in the event of a second bankruptcy. Equifax and TransUnion are the agencies that keep credit reports and ratings on file and you can always make a consultation request to check your file.
Your credit file has a significant impact on any financing or mortgage applications you may make, for many years to come. It is therefore essential to be concerned about your rating in order to avoid unpleasant surprises. In examining a consumer's rating, lenders are able to assess that consumer's risk. Therefore, when you apply for a mortgage, your credit rating will play a role in the interest rate you are granted.
Lenders, such as telecommunications companies, insurers, building owners and financial institutions, may ask for your authorization to conduct a credit investigation. Following this investigation, they will be in a position to grant you the loan you request or refuse to do so. A poor credit rating could therefore prevent you from renting a home, getting a mortgage or financing to buy a car or carry out a renovation project.
Paying your bills on time will have the greatest impact on your credit rating. In the event that you are unable to pay these in full, at least try to make the minimum payment of your outstanding balance, giving priority to the repayment of debts with the highest interest rate. Also, avoid reaching your credit card limit, as this will increase your debt ratio, which is negatively perceived by lenders.
If you have a number of unused accounts or financing, it may be wise to close those that you are not using. Financial institutions have a negative view of the accumulation of a large number of accounts, even if they have a zero balance. They may fear that you will suddenly load your credit cards.
And lastly, you should also be aware that you can always consult your credit file. To do so, you must send a written request to a credit bureau. This will give you the opportunity to check your financial health. And if you notice an error, you may request a correction from the lender concerned. Consulting your file could therefore enable you to avoid this type of mistake, while ensuring peace of mind when applying for financing or a mortgage.
If you think you need help to get your finances in order, don't hesitate to consult a licensed insolvency trustee. At Poupart Syndic Inc. we can advise you on the best practices to adopt, while offering you a solution adapted to your situation, so that you can avoid bankruptcy. Contact us now to get out of debt and restore your well-deserved financial health.
Need help? Contact us to get all the answers to your questions and put an end to your worries, in so doing.