SEVEN
The Importance of a Good Credit Score
Money can’t buy love, but it improves your bargaining position.
— CHRISTOPHER MARLOWE
ARE WE MOVING rapidly toward a cashless society? With increasing popularity of digital payments, such as Apple Pay, rise of cryptocurrencies, and the decommissioning of certain monies, such as pennies, it seems our society is signaling a preference for intangible payments over the traditional tangible forms.
I fear that we will continue to overspend if money becomes even less tangible. What’s worse, some of the credit practices south of the border are starting to spill over up here. Whether you’re looking to borrow or not, having a blemished credit score could cost you dearly. In the U.S., landlords and employers can check an individual’s credit record. Some provinces in Canada base their insurance rates, in part, on your credit. Many contracts, such as leases, monthly costs for security systems and much more are currently affected by your credit score. Whether this is fair or not, you need to know how to maintain a great score and how to improve a poor one.
Why Credit Is Important
Unless you have a very wealthy and generous family, marry rich, win the lottery or know you have a big inheritance coming, you’ll need to make use of credit a few, or even many, times over your life. Yes, you can save up for a car, home, university education, starting a business, etc., but most likely you will decide to get what you need more quickly with the help of borrowed funds. The fact that those funds are now being offered at such low rates makes borrowing that much more attractive. However, if you have a poor credit rating, you might have to pay well over standard interest rates and possibly not be approved for borrowing at all (at least until your score improves).
Your score affects more than just future borrowing. Even getting a new cell phone requires a credit check and a decent score. Maintaining an above-average credit score throughout your lifetime is imperative.
Get to Know Your Banker
It’s equally important that you build a relationship with your banker. Solidifying your association by having all your bank and investment accounts in one place along with your mortgage or other debts (credit cards, loans, etc.) doesn’t guarantee great service and better interest rates in the future, but it does help. Your good credit record, together with the length of time you’ve been a customer, enables your banker to take that into consideration and go to head office with extra leverage (if needed). Loans are approved by a computer program these days — it’s rarely a human or personal process.
Check Your Credit Report Regularly
A frequent personal check of your credit report could ward off fraudulent activity. If you’ve never seen your own credit report, then please add it to the top of this week’s to-do list. After I’ve explained what’s on your report it will become clear why you must check your report regularly. If identity theft has been committed in your name, you’ll see irregularities on your report. It still might be too late to prevent the money from being stolen, but it might prevent further damage.
I don’t think it’s at all fair that we as consumers are so closely controlled in many ways by our score, yet we have to pay to get it. And, if your lender just pulled your credit report for a loan of some type, you can just ask them, right? Wrong. It’s illegal for them to share that information. Both Equifax and TransUnion have increased the educational component on their respective websites, but they keep the specific information a secret, such as what actions cause your score to go up or down and by how many points.
Over the years, I’ve had many volunteers and individuals in desperate need of credit repair who have come to me and allowed me to help them (in many cases significantly increase their score and in a shorter time than one might think) and thus their real-life case studies are the foundation of my knowledge and experience. I’ve also subjected my own credit score/report as a guinea pig to test what increases or decreases a score and by how much. So, it’s hardly science, but what I’ve discovered over the years will help you know what you need to do to maintain or increase your score. Some tips are obvious and some are completely illogical!
How to Get a Copy of Your Report
Most Canadian lenders use two main credit reporting agencies: Equifax and TransUnion. You can obtain a free credit report from each company as often as you’d like.
First, go to one of their websites and print out a form:
Equifax Canada: www.equifax.ca
TransUnion Canada: www.transunion.ca
Equifax and TransUnion both operate in the U.S., so be sure to check you’re on the Canadian sites.
By Mail
Print a form, fill it out and send it by mail. Checking the report you get back is prudent, but this report won’t tell you your magic credit score — for that you’ll have to pay.
Online Instantly
To get your report online instantly, with or without your score, will cost you.
Equifax: $15.50 for the report alone and $23.95 for the report plus your score and explanation (at the time of printing).
TransUnion: $19.95 per month for unlimited access to your credit profile and score.
If your report is satisfactory and your credit has never been severely damaged and you have never had a problem with fraud, it is unlikely you will need this service. So, checking your report once or twice a year should be sufficient. If you suspect or know there has been fraud, you can have both credit agencies flag your account.
You may find accessing your credit report online a bit difficult the first time. You’ll need to have at least 30 minutes (or more) free and a secure place such as your home (and not your office) from which to call Equifax or TransUnion if you get locked out. You’ll also want to have the account numbers available for your loans, credit cards, etc.
I asked a good friend of mine, we’ll call him Jackson, if he would mind going through the process with me. He was already on Equifax but had never checked his TransUnion score. Since he had recently bought a car and financed it with a loan and taken out a modest line of credit, he was curious to know how his Equifax score reflected this recent activity. Let’s follow Jackson’s investigation to learn more about the whole process.
Understanding Your Score
Both agencies have proprietary software for calculating their scores, so each score is slightly different. However, the information conveyed by the scores is similar.
The scores work on a range of 300–900 and you want your score to be as high as possible. But don’t worry, it doesn’t have to be perfect.
In 2017, fewer than 5% of Canadians had a score of 850 or more. However, more than 54% of Canadians (according to Equifax) had a score of 760 plus. If yours is less than 760, don’t worry, but you have some work to do. Even if you have no plans to use credit in the near future, it’s still a good idea to have the best credit score possible.
Jackson decided to pay the full amount to get both his report and his score from Equifax so he could compare it with his TransUnion report.
Interestingly, Equifax has a five-category naming protocol for their scoring:
• very poor (300–559)
• poor (560–659)
• fair (660–724)
• good (725–759)
• very good (760+)
Transunion uses the VantageScore® 3.0 Model.. Their scoring is:
• A (781–850)
• B (720–780)
• C (658–719)
• D (601–657)
• F (300–600)
Jackson scored 749 with TransUnion and was ranked by them as “fair,” but this ranking was “good” with Equifax. A few things on Jackson’s TransUnion credit report appeared incorrect. The report listed no late payments when Jackson knew he had made three late payments with one credit card company and one with another. Of the four old addresses listed, two were places where he had never lived. His current address was also wrong. He immediately contacted TransUnion regarding his concerns. It is important to check your credit report for any errors and follow up on these items with the credit agency to ensure they are resolved.
What Does Your Score Mean for Your Credit Rating?
Your score is an important element when a lender is considering approving you for credit, but it’s only one part of the approval process. Your net worth, employment stability, the size of your other debts, length of time in your home and other factors are also considered. Your credit score is only a snapshot of how you’ve handled your current and past credit.
What Information Is on Your Report?
Your report contains the same information you’ve given your lenders. Information about your debts is supposed to be removed after six years with Equifax, seven years with TransUnion. If you’ve been bankrupt, that information remains for approximately 6 to 14 years. However, you may see old accounts still on your report, but they should not affect your score past the respective number of years.
The first information you’ll see is personal, such as:
• your name
• current and previous addresses
• employment
• SIN
• date of birth
Again, all of this is information you provided to your last lender.
The next sections itemize each debt:
• loans
• credit cards
• leases
• personal lines of credit and more
In Canada, a mortgage with one of the big banks is not usually reported on your credit report (although, this is supposed to be changing in the near future with the big banks looking at reporting mortgage activity). Most individuals find this shocking as it’s our largest debt. If you’ve also been exceptional and never missed a mortgage payment, that history isn’t reported on your report and doesn’t help your score. This section will list:
• creditor’s name and phone number
• type of account
— personal or joint
— revolving (you can pay it down or run it back up, as with a credit card) or installment (a set amount you pay each month such as a car loan)
— currently open or closed; if closed, whether payments are up to date
• date the account was opened: having accounts open for long periods of time is good for your score
• date a creditor last reported information
• date you last used the account: if you don’t use your account at least every other month, your score can be negatively affected; if you have only a couple of major credit cards, you will use them more frequently than if you have too many
• credit limit
• payment amount
• balance
• past due accounts: balance and past due amounts are some of the most important indicators calculated in your score
• payment history: how many times you’ve been 30, 60 or 90 days late on a payment; 1 day late on a payment counts as 30; a payment on the 31st day count as 61 days and really hurts your score
(Note: the information in each of the above applies to each creditor on file)
• your credit history and banking information (if any)
• information from public records, such as a bankruptcy, orderly payments of debt, judgments, seizures and more
• collection accounts: usually utilities and cable bills, etc., are not reported on a credit file; however, even if an account has been closed, a small amount could remain owing which could be enough to pull down your score and cause credit to be declined
TIPS FOR IMPROVING YOUR CREDIT SCORE
• Whenever you close an account of any type, always have a letter mailed or faxed stating that your account has been paid in full and keep it in your files in case of a problem down the line.
• Negotiate: if you owe money to a company and can’t pay the entire balance, negotiate. If negotiations don’t work, your account will be sent to a collection agency. If something is reported as being in collections but you’ve actually paid it off, you may need to intervene to get it off your report.
Get a letter from the creditor that the account has been paid in full. If the item is not off your report in a couple months (I’ve seen creditors and credit agencies take as long as six months to make changes on reports), you have the documents to show the credit agency it should be removed. (Having something in collections will greatly reduce your credit score.) If, for some reason, you’re seeking credit at this time, lenders might be more understanding about your score if you have a letter proving the debt was paid off (your effectiveness with a new creditor will depend to a great extent on how long the debt sat in collections, how large it was, etc.).
Inquiries
Hard Inquiries
When you apply for a loan, lease, credit card, cell phone or anything else requiring credit, the name of the creditor shows up at the end of your credit report (Equifax lists both hard and soft inquiries but TransUnion lists only hard inquiries).
There’s a magic “three hits and you’re hurt” theory when applying for credit. You don’t want to apply for too much credit in a short period of time. Many people do this innocently and don’t find out until they’re declined on the third credit application.
Consider that you’re moving to a new province. You sold your car and, with the amazing dealer financing, you decide to get a new car. Then, you get a line of credit from your bank to do renovations on your new home (you were able to port over your mortgage, so a new application wasn’t needed) and then, you go to get a new cell phone plan with a new carrier and you’re declined. You can see how easy (and necessary) it can be to apply for too much credit in a short amount of time. Don’t think of the credit reporting agencies as thinking, humane, reasoning human beings. No. It’s strictly a mathematical formula that says, you must be in trouble if you’re “seeking” so much credit in such a short period of time. The reporting agencies don’t care what the applications were for, nor can they decipher logic. So, fair or not, do your best to space your credit applications over months — better yet, years.
I mentioned earlier in this book that even if you don’t need credit in the future and don’t think you need to care about checking your credit, this section could be your tip-off to fraud — that someone may have stolen your identity. If you check your report and see under the hard inquiries a creditor you have never dealt with, you are probably looking at a huge red flag. If that’s the case, you’ll want to notify both credit reporting agencies immediately; contact the creditor as well and, possibly, the RCMP.
Go to the Resources section in Chapter 10 for more information on how to act fast if you think you’ve been a victim of fraud.
Soft Inquiries
I like the fact that Equifax lists these as well. These inquiries are “peeks” at your credit report without affecting your score. As well, when you check your own score and access your credit report, it shows up in this second category but also does not affect your score. For example, when you sign a credit card application (we all read the details, right?) you’re usually agreeing to allow the company to check your credit to see if they’ll extend you credit. Further, because revolving credit can be called in by the creditor at any time, they could secretly check to see if they might want to take away your credit extension due to a poor score (which they absolutely can do, and they can demand that you pay your balance off in full). Usually you’ll see your credit card company offer you a credit increase just after they’ve checked your credit report.
How to Keep Your Credit Score Healthy
Your credit score is fluid. It can change every month based on your good, bad and consistent use (or lack thereof) of your credit.
Let’s look at what you absolutely must be aware of, especially if you’re trying to improve your credit score.
1. Always make your credit card minimum payment on time — every time!
There’s never an exception to this rule. Even one day late counts as thirty days late. Each time you have a 30-day hit, it hurts your score and 60- and 90-day delinquencies can dramatically pull down your score. So, never neglect any account. If you find yourself unable to keep up with your minimum payments, see the interview at the end of this chapter and go to the Resources section in Chapter 10 for credit counselling resources that can assist you before the problem gets serious. If you, or someone you know needs financial help, encourage them to take care of it immediately because it never, ever gets better on its own — quite the opposite, in fact. If your credit card is with an institution other than your main bank, ensure that you allow at least three-to-five business days for the payment to be processed.
YOUR CREDIT SCORE IS DOWN —THE FINE PRINT REALLY IS IMPORTANT!
Chantel was a university student who needed a laptop but didn’t have enough cash or enough credit on her credit card to buy one. She went to an office supply store to shop for her laptop and was told by the sales person she could defer the entire payment process for six months, i.e., she wouldn’t have to pay either interest or principal for six months if she signed up for their in-store credit. It sounded like the perfect plan. She used her parents’ address for the loan application. When a letter arrived at her parents’ house confirming the account had been opened and reporting the account balance, her dad promptly gave her a call. She told him not to worry and that she had it under control.
Months went by and every once in a while Chantel’s dad would give her a call about the office supply store’s letter. Seven months after her purchase, Chantel went to an alternative cell phone carrier to sign up for a new plan and was declined. She was shocked! Her disbelief was understandable because she was never behind in her apartment rent, conscientiously paid her credit card minimum payments on time (they were nearly maxed out, but she was never late) and so on. She dashed home and used her new laptop to pull her credit report and, to her horror, saw that her rating was barely over 500. How could this be? She began to panic. There, in the collections section, sat her office supply account with seven 30-day-late hits, three 60-day-late hits and two 90-day-late hits. A recipe for a ruined credit score.
The next day she marched back to the office store to find out what had happened and tried to talk to the same sales person, but he no longer worked there. Instead, Chantel spoke with customer service and explained that the salesman had led her to believe she wouldn’t have to start making payments or be charged interest for six months.
The truth was that she had accepted a no-interest, not a no-payment, option for six months. Did the sales person lie? Maybe. Did Chantel just hear wrong? Perhaps. Nevertheless, whatever had been said, it had been her responsibility to read the fine print before signing her name and she hadn’t done so.
Chantel’s situation is an example of a very sad but costly innocent mistake that happens all too often. I know the fine print can be daunting at times, but it’s your responsibility and right to read it. Take the time to do so. If there is anything you don’t understand, don’t sign the sales contract until you have cleared it up to your satisfaction.
2. Always pay more than your minimum monthly balance.
Your goal should be to pay off your full credit card balance every month. But if you can’t, pay as much as you can more than the minimum monthly payment. If you’re not convinced what just a dollar a day more could do to impact an ordinary credit card balance (as of mid-2017, the average Canadian carried approximately $4,028 balance on their credit cards in total), here are some numbers for you to consider.
Let’s assume you have a balance of $4,000 on a department store card that charges 29% annual interest and requires a minimum monthly payment of $120.
If you make just the minimum payment and never put another new purchase on your card, it will take 28 years and one month to pay off the balance and you will have paid $12,541.19 in interest! Surprised? Since the government forced credit card companies to start reporting how long it will take a consumer to pay off their balance if they only pay their minimum payment, there’s really no excuse for us to not be more aware.
If this example sounds similar to your situation, there is one nearly painless solution. Just add a dollar a day to the minimum monthly payment, now totalling $150 a month. The result of such an easy solution? You will now be free of this debt in just three years and six months and pay just $2,233.01 (I still think that’s too much) with a savings of nearly 25 years of payments and $10,308 in interest. For just a dollar more a day!
3. Don’t go over the limit on your credit cards.
Never be at your maximum limit. If you find yourself at or very close to your limit because of a one-time major purchase, start paying off every cent you can to create a little cushion. The reason you need to start paying down immediately is that the interest charged on the unpaid balance might be enough to push you over your limit and impair your credit score. Just $20 or $30 is enough to hurt your score. The effect of being over by just $20 or $30 can therefore be much more than just $20 or $30. Some credit cards allow merchants to let you go slightly over your limit to avoid the embarrassment of being declined for a small amount. The amount depends on the customer. What you need to know is that this company has an over-limit fee of $35. If this situation sounds familiar to you or someone you know, you have the right to call the credit card company and ask them to stop allowing this so-called privilege on your account.
4. Limit revolving credit and installment loans.
It may seem normal to have a balance of around 35%–50% of your total available credit, but ideally you should be under 35%. If you had a credit card limit of $2,500, ideally you shouldn’t have a balance of more than $875. As you can imagine, as one approaches or exceeds 90% of their credit limit, the credit agencies see a big red flag.
When you first take out an installment loan such as a car loan, your score will likely drop and might stay down for a while, as it will appear you’ve borrowed your credit limit. If you take out a car loan of $30,000, you’ll be near your maximum for the first year. There’s not really much you can do about that, but, hopefully, if you otherwise have good, long-established credit, your score shouldn’t drop too much. However, as long as you always make your payments on time, your score will rebound.
Some Important Credit Don’ts
1. Don’t close bank-issued major credit cards.
Use them often, but pay the monthly balance off in full. The credit-scoring system will wonder why you closed out a major credit card and become suspicious of your reasons. You’re better to keep the card, use it periodically, say every month or two for a small purchase here and there, and then pay the balance off in full each month.
2. Don’t bounce loan payments.
This is dangerous not only because delinquency will affect your credit score, but also because non-sufficient funds (NSF) charges may apply, which typically range from $25–$48.
3. Don’t allow anything to go to collections.
Negotiate with the company in question. Keep making the payments even if there is a dispute. Just because there’s an issue with your car and you want to return it to the dealer, you should continue to make the loan/lease payment and try to recoup costs afterwards. Even if you’re in the right at the end of the process, you could dramatically hurt your credit score by not making the payments required under the contract you signed. You’re better to try to recover the money later from the company or take the matter to small claims court. By not breaching the contract, you stand on safer legal ground, and will have a better chance of recovering your money through a court-ordered judgment later.
4. Don’t have too much available credit.
Even if all your revolving credit (usually credit cards) has a zero balance, the system assumes that you could go out and max out all your cards tomorrow. I know it sounds bizarre, but the system cannot seem to distinguish between having credit and using credit. There’s no magic number as to how much is too much credit for you, but if you have no late payments, no collections, low-to-zero balances and your score is still unacceptable, it might be because you simply have too much open credit. When you check your credit report, look to see if you have any old accounts (from furniture companies or jewellery stores, perhaps) that you’ve forgotten about but the system still considers you to have available credit.
5. Don’t open any new department store cards.
If you currently have more than one, close the ones you rarely use. Fewer cards will be helpful to your score in the long run.
Due Date vs. Statement Date
Some credit cards have the same due date and statement date, but the vast majority don’t. The due date is usually indicated very clearly in a box on your credit card statement. That’s the date your minimum payment is due. It’s also the date by which you need to pay your entire balance if you want to avoid interest payments. The statement date, on the other hand, is the date your statement is generated and the date the credit card company reports to the credit agencies.
Let’s suppose your statement date is April 15 (statement dates change — look at the left or right top of your statement for your date). The statement tells you your minimum payment is due on May 8. Around May 15, your next statement will come in saying your next due date is June 8, and so on. Let’s also assume you pay your credit card off in full on June 8 and therefore you have no interest charges.
Let’s also assume your credit limit is $5,000. You’re renovating your home and the hardwood flooring arrives and the cost is $4,900. Your card has a zero balance and you put the flooring on your card. Here’s the problem. By chance you put the $4,900 on your card two days before May 15, the statement date. It was the only transaction on the card since you had paid off the entire balance on May 8, the due date. Because the $4,900 went on your card before the statement date, it gets reported to the credit agency. But the credit card company knows you pay your card off in full every month, right? No. Not at all. Your credit card company reports your balance to the credit reporting agency on one date, and on one date only and that’s the statement date. Because you were reported near your limit, you could see your score come down.
The moral of this story is: keep track of both the statement and due dates if you’re trying to improve your score. Make sure you always pay at least the minimum payment each month and keep your balances as low as possible on statement dates. Remember, since the statement date is usually (but not always) the 15th of the month, you need to keep your balances low from the 14th to the 16th. Put those dates in your calendar as a handy reminder.
Supplementary Cards
Is your credit card really yours? Are you really building credit in your own name? You need to check now.
If you have a supplementary card, it’s not your credit account and you’re not building credit for yourself. For example, I can get a supplementary card for almost anyone on my credit card account. I can get one for my husband, business partner, assistant, or my niece who’s travelling to Europe. Let’s say that my husband’s only credit card is the one on my account and he has no other debts (or credit) in his name. If I passed away or divorced him, he’d be in deep credit trouble as he would have no credit score.
The card may look as if it’s his because he’d have a unique number and name on the card. So how would he know? The monthly statement would be in my name. His purchases (or anyone else’s who has a supplementary card on my account) would show up on that statement. However, I’d be responsible for any and all those purchases and to my card’s maximum amount. If I’m responsible for all purchases and payments, and applied and approved for the card, I’m the one building credit or being hurt if someone is spending at my credit limit.
Many couples operate with one credit card account for so many years and they lose track of whose account it really is and never think of this being an issue. If you currently have only a supplementary credit card, get one in your own name! It doesn’t have to be a card with a large limit and you might consider one with no annual fee or rewards. But without it you can’t build your personal credit.
Protect Your Identity
According to the Anti-Fraud Centre, there were 8,465 reported cases of identity theft in Canada in 2015 and 17,140 cases of identity fraud for a total loss of approximately $11 million. The Anti-Fraud Centre estimates that, in general, these statistics represent less than 5% of the total number of victims overall.
In January 2010, Canada gained a new law which created three new offences under the Criminal Code with regard to identity theft:
• obtaining and possessing identity information with the intention of using it deceptively, dishonestly or fraudulently
• trafficking in identity information for criminal purposes
• possessing or trafficking in government-issued identity documents
Identity thieves are looking for:
• full name
• date of birth
• Social Insurance Numbers
• full address
• mother’s maiden name
• username and password for online services
• driver’s licence number
• personal identification numbers (PIN)
• credit card information (numbers, expiry dates and the last three digits printed on the signature panel)
• bank account numbers
• signature
• passport number
Dos and Don’ts to Help Protect Yourself
Here are a few things you can do to keep yourself safe. Prevention is key — it’s a great deal easier to do the small things to secure your identity than to deal with the possible devastation later.
1. Don’t carry more information than you need.
Carry only your driver’s licence, one credit and debit card and some cash. Always keep your passport at home (in a safe, if possible) along with your SIN card.
2. Don’t show your ID for purchases with your credit card.
(This is happening much less with the chip and PIN technology). If a merchant needs to see your signature and you show your driver’s licence, for example, and they have a hidden camera, they would then have your date of birth, full name, full address and driver’s licence number. That gives a would-be thief a great deal of information to commit a crime in your name. However, if you are travelling in the U.S., they may insist on other ID. I suggest you use white-out tape to cover all your information except for your name and signature.
3. Do check your credit score often.
4. Do make a list of bills and check their arrival dates.
If you don’t receive a bill by the expected date, call the creditor. Bills stolen from your mailbox can give important account and personal information that can be used to defraud you.
5. Do install a mail slot if possible.
Identity thieves can steal your mail from an unlocked mailbox.
6. Don’t make calls to your bank or credit card company that require you to say out loud your secret password in front of anyone.
Don’t state it in front of a partner, friend, co-worker — anyone. Sadly, a great deal of fraud is committed by people close enough to us to be trusted.
7. Do call your bank and credit card companies and add a second secret password to your account.
Be sure you remember this one. (Default is usually our mother’s maiden name, which is pretty easy to find out).
8. Do shred everything with even the slightest bit of personal information on it.
9. Don’t ever respond to an email asking you for any personal or financial information or to change any password, update information or more (unless you initiated a change).
Your bank would never send you an email asking for any personal information (and scammers are getting so good at fooling even the brightest computer user). When in doubt, call the company in question or go directly to their website — never use the link that an email phisher has included.
For more specific information on protecting yourself from identity theft, go to www.priv.gc.ca for suggestions from the Privacy Commissioner of Canada.
Conversation with Laurie Campbell (CEO, Credit Canada Debt Solutions)
Q: What are the top warning signs that someone is in over their head financially and should call up a credit counsellor?
A: The top three warning signs are:
1. Borrowing from one credit card or line of credit to pay the other. 2. Relying on credit for day-to-day purchases. 3. Stressed out about finances — from not being able to sleep to feeling ill — if you’re worried that you won’t have a roof over your head next month, it’s time to take some action.
Q: What does a credit counselling company offer?
A: First, ensure you’re dealing with a non-profit credit counselling company. They offer services such as budgeting assistance, how to manage your debt, debt resolution and all the steps along the way. And you don’t need to be in severe debt. You might contact a credit counsellor to simply set you on the right financial path even if you’re not in dire need.
Credit counsellors understand that feeling overwhelmed by debt can happen to anyone. They can provide comfort to the struggling individual and see new angles. Also confirm that your credit counsellor is certified. Services are completely confidential, non-judgmental and come with support, expertise, and an in-depth look at your situation and more.
Your first consultation is extensive and absolutely free. There may be fees later, depending on the debt resolution path. However, that first appointment, generally an hour-and-a-half, will provide the individual with a comprehensive look at their situation with a certified counsellor. They can then determine the right path for you.
Q: What should you look out for?
A: Do your research and shop around. Find a non-profit credit counselling company, ask if their counsellors are certified, accredited and belong to an association, and are licensed in the province in which they operate.
Be cautious of any company that charges large fees up–front, makes things more confusing or vague, encourages no conversation or action with your creditors and, lastly, sounds too good to be true.
Financial troubles aren’t just stressful, they can be shameful. But it doesn’t have to be that way. You can talk on the phone with someone who can help and who can offer concrete advice for no initial charge. Time is never a friend in a financial time of need and debts never go away or resolve themselves. If you feel that any of the three warning signs apply to you, get help today (see the Resources section in Chapter 10 for a listing of non-profit credit counsellors in Canada).
Easy Action Steps
1. Even if you’re not concerned about your score, you should check your credit report at least once or twice a year to ensure the information is correct and your identity hasn’t been used to apply for credit for someone else.
2. When you close an account, ensure that you get a letter from the creditor stating the account is closed and it has a zero balance.
3. Check that you’re actually building credit in your own name. If you’re unsure if you have a supplementary card, call up the credit card company or check the monthly statement.