credit scores?

Question

How to raise your credit score?

Answer 1

Make payments on time and regularly, keep your debt to income ratio low.

Answer 2

There are many ways. Pay down any credit card balances that are maxxed out. Get a second job and decrease your debt to income ratio. Negotiate to have old negative reports removed. Make all payments on time and prepay if possible. If you have judgments, bankruptcy, late pays, etc then about all you can do is the above plus wait. There are companies out there that claim they can fix your credit, but everything they do, you can do for free. Just get a copy of your credit report and investigate it very closely and then make inquiries with any creditor that has made a mistake or negative report.

Answer 3

The best thing to do, quite frankly, is not to worry about your credit score. Spend less than you make, and save and invest the difference for a long period of time. That is the only financial strategy that works every time. Your credit score, as Dave Ramsey says, is actually an "I love debt score." Don't bank your financial future on the management of debt.

Answer 4

The "beacon score" or FICO (Fair,Isaac, and COmpany) score is SUPPOSED to be a tool that potential creditors use as "an indicator of potential fraud".

The problem is that the model is flawed. I went through a divorce a few years back, and even though I had never missed a single payment in over 10 years, never bounced a cheque, paid loans off early, ....... My "beacon score" dropped to around 620. My Platinum payment record ment SQUAT.

Imagine my surprize when Banks and Credit Unioins used this information inappropriately! At that time, most Banks and Credit Unions would refuse to open a basic chequing account with NO overdraft based on a bad credit score!

Since that time the Federal Government has passed "access to basic banking services" legislation that prohibits a Bank from refusing you basic services because of a low FICO score - all you have to do is have valid ID and some money to deposit. However, Credit Unions are Provincially regulated and that law does not apply to them. Westminster Savings Credit Union will still refuse to open even so much as a savings account if you have a bad "credit report" - even when you are not asking for credit! It is "against their policy" to accept people with a bad credit report - even when you put cold hard cash on the table. I put $4000 on the table, and they handed it back to me and said "I'm sorry sir, we cannot accept you as a member."

Funny, I thought that Credit Unions were "for the people" and "there to help". I guess they are only there to help those who have money. Oh yeah - I had money! I digress.

In addition to paying your bills on time, another thing that affects the score is when you have applied for credit too often in a short period of time. Or worse, if you apply for credit and are turned down!

You see it was viewed by the developers of the FICO model that one pattern of fraud was people who obtained large amounts of credit in a short period of time. These people would then max out the credit, and disappear. I suppose this does happen some times. But what it does in put a great responsibiliy on us as consumers to do a few things:

#1 Get a copy of your credit report from ALL reporting agencies at least once per year. The two reporting agencies are EquiFax Canada, and Trans Union Canada. The overwhelming majority of creditors use EquiFax. Too bad too. The "head office" for EquiFax in in Quebec. They are the most obnoxious and uncooperative bunch I have ever had the displeasure of dealing with. It took me over 3 years to get my file corrected.

In the end, I discovered that there are LOCAL offices! But they don't and wont tell you that! I actually got the local location - in Burnaby BC - from Trans Union!

When I presented myself IN PERSON with appropriate ID, and will a STACK of legal documents, my file was corrected in less than 10 minutes. (after waiting for quebec for over SIX MONTHS while they held the exact same information).

Be that as it may, get the reports. Review them, and don't ask for credit if your score is so low that you wont get approved! If you do, then your score will go down even more!

Great system, eh?

#2 Don't just shot-gun your credit applications! Do your homework and find out about different lenders. Chose a lender that has products and services that you actually need. Check their track record on customer service and satisfaction. Check the BBB. One of the problems I had was that one of my former creditors not to mention any names (VAN CITY SAVINGS CREDIT UNION) kept "updating" my credit file with incorrect information! I would no sooner get my file sorted out, when ZAP! It was wrong again! EquiFax does not like to talk to people. People are NOT EquiFax's customers! The Banks and Credit Unions are EquiFax's customers - and EquiFax will usually believe the Bank before they will believe YOU - even if you have "hard evidence" that the Bank has "made a mistake". So if you chose a "bad" creditor, then you may wind up having no end of problems down the line!

Most creditors will tell you that they look at a number of "factors" when considering an application. I am here to tell you that on the whole this is a lie. What most first teir pions look at is that FICO Score. They put on their blinders and look at teh computer screen. If a low number pops up - out comes the "REJECTED" stamp. It does not matter if you are making $100,000 per year and are asking for a $2000 RRSP loan! It does not matter if you have been banking with them for 30+ years! If the number on that screen is too low, you are rejected.

#3 - Give it time. Credit glitches usually come off your file with time. The first bankruptcy will be off in 6 years. If you go bankrupt again I think it is more like 14 years! So don't just think you can go bankrupt without consequences.

Consult a Bankruptcy Trustee. These are knowledgeable professionals. It is FREE to consult with them - unlike lawyers! If you DO enlist their services, the fees YOU pay are small, and fixed! All other fees are paid by your creidtors.

Consider insolvency under Division 1 of the Canada Banruptcy Act. This is much better than Bankruptcy, but it is not for everyone.

#4 - NEVER allow a mortgage to go into foreclosure. The CMHC insurance you paid for is to cover the BANK - NOT YOU! The bank will get their money. And then CMHC will come after you until evey penny is repaid! You will never see a tax refund cheque ever again! And, as far as I know, there is no requirement to remove the record of foreclosure from your file (not too sure here though). Foreclosure is a black mark you do not want.

Answer 5

Pay your bills.