Keeping Score

“People owe it to themselves to know,” says Equifax marketing and communications manager, Michael Loftquist. Equifax supplies FICO scores and credit reports upon written or online request. A FICO score is a number between 300 and 900 which displays what kind of shape your credit is in—the higher the number the better. A credit report details every bit of credit you’ve ever had, offering up a picture of how much of a risk you may or may not be, in the case of being loaned to or offered credit.

Regularly obtaining a credit report can also help you protect yourself from identity theft, allowing you to monitor activity and make sure no one is
using your identity to open up new lines of credit. Reasons for a low credit score can be the result of making late payments, having excessive amounts
of maxed-out credit or applying for several forms of credit. Bouncing back from the consequences of this ill-advised behaviour takes time.     

“Use [credit] but pay it off,” says Yvonne Couvier, branch manager for Winnipeg’s main Bank of Montreal branch. Paying off your credit consistently or making your minimum payments consistently and on time is the best way to increase or maintain your score.

Couvier suggests having an automatic minimum payment structure set up with your credit providers, so you won’t miss or be late with a payment. Also, if you have teenagers or young adults you may want to consider passing this knowledge on to them.

“You know they’re getting barraged,” says Couvier about people in the 18 to 25 age-range getting offers for credit cards and lines of credit. Racking up credit at a young age can definitely make attaining those dreams of buying a house or a new car a hard-to-achieve reality.

Brent Parnell from Vertuity Mortgage says a lower credit score often means you’ll end up paying more when you take on a mortgage. On a $200,000 mortgage, the costs can add up. “The buyer with the 700-plus credit score could save on average $250 a month on their mortgage payments and approximately $19,000 in interest costs over 5 years,” says Parnell.

If you’ve dug yourself a little deep, don’t hesitate to ask for help at your bank or credit union. At the very least, they can offer you advice on the best ways to begin getting out of debt and rebuilding your credit. Couvier also suggests secured credit cards, for anyone wanting the use of a credit card with a risk-free way to build up their credit score. Secured credit cards are essentially pre-paid credit cards.

You can search online for the Government of Canada’s guide, Understanding Your Credit Report and Credit Score, which will walk you through what reports are and how to get them. If you have the patience for snail mail, getting your credit report can be free and checking
your credit yourself has no negative effects on your score.