I’m not sure what I did to deserve all these wonderful PF bloggers knocking down my door to guest post for me… so just want to say a big “THANKS!”.  Financial Uproar is one of my favourite blogs because he tells it like it is and he’s laugh-out-loud funny (especially when he does his Saturday Link Dumps).  He’s probably the funniest PF blogger there is, I’d say.  So I am very appreciative that he’s helper a sister out when she’s stressing about school.  Thanks Nelson!

Hey, I don’t mean to be a downer, but, what do I care? This isn’t even my blog.

Did you know that, without a decent credit score, your life is basically over? Yep, it’s true. If you need confirmation, just check around the personal finance blog-o-net. I’ll save you the time, since there are approximately 65,342 (author’s estimate) posts written on the subject. So yeah,  I kind of think having a high credit score is very, very important.

Of course it is. People with low credit scores will have difficulty getting any sort of credit. They can forget about a mortgage or any sort of unsecured line of credit. Even getting a credit card with a limit higher than $500 is difficult without a decent FICO score. And, to top it off, even potential employers will have a look at your credit report. Your crappy credit score could even make you lose out on that dream job.

But fear not, for all is not lost! Did you know that there are websites that you can check your score for free, every few months or so? What’s that? You do, because it’s been mentioned in each of those 65,000 articles? Well, never mind then.

I’m going to go a different direction with this guest post. I’m going to list the reasons why you shouldn’t sweat about your credit score. I’m all about freeing up time for things that are important- like hitting on Y&T even though she clearly has a boyfriend. He probably wants to fight me. I can’t say I blame him.  (Editor’s Note: LOL but we’re internet boyfriend and girl friend so it doesn’t count of course.  Doesn’t everyone have an internet girlfriend/boyfriend? KIDDING)

A High Score Isn’t That Hard

Let me tell you all a story about my credit report.

Back in 2008, I decided I was going to go ahead and buy a house. In the process of applying for the mortgage, I got to see a copy of my credit report. My score was 802. (Editor’s Note: Dang boy!! That’s high!  I think mine was 780 or something though I did have lots of credit cards but paid them all off regularly)

How did my score get so high? Did I use the credit building tricks I’ve read so much about? Nope. In fact, I did some things I wasn’t supposed to do. I applied for a credit card just to get the free Blue Jays t-shirt, promptly cancelling that card a few months later when the bank asked for their annual fee (which I never did pay). The credit card was never used. That’s not so good for your credit score.

During that time, I only used one credit card. It’s the same credit card I’ve had since I was a much younger man. It’s the only card in my wallet, and it gets paid off in full. Every. Single. Month.

I have also never had a car loan or any other installment loan. Credit gurus commonly tell people to get a loan of this type and at least make some progress on it, which will increase your FICO score.

The point of all this? By being smart financially and by using credit responsibly, I have a great credit score. And the best part is, I didn’t even try. You can accomplish the same thing, just by not being a dirtbag.

The Consequences Aren’t That Bad

What are the three most common consequences people say about not having a card?
1. You’ll pay more for debt. (assuming you can even get it)
2. You’ll have difficulty renting a house or getting insurance.
3. You’ll lose out on your dream job.

Well, I’ve got good news for some of you. You can quite easily exist without a great credit score.

Think about all the people you know who have too much debt. Some of them got into trouble by loading up on so called “good debt”, financing things like their education or a house. Most of them though, have some sort of ill-advised consumer debt. There are millions of people in North America who would have easier lives if they never had any access to credit.

Now that’s not saying credit is bad. credit isn’t necessarily good or bad, it’s what you do with it. All sorts of people exist without using credit whatsoever. All sorts of people would love to have never seen credit cards. These people might even go as far as cutting up those cards once they pay them off. Credit may seem like a necessity, but it isn’t.

As for the house, insurance and job arguments, realize one thing. Many landlords and companies will check credit reports. Many more won’t bother. If you can avoid renting a house from a large scale landlord, you can probably avoid a credit check. It’s the same thing if you go work for a small, family owned company. All sorts of companies will screen potential employees with a criminal records check before they ever do a credit check.

Although credit makes it easier to live in today’s day and age, it’s not vital. Food, air and shelter are true necessities. Credit is not. I’m not saying you should intentionally screw up your credit. I am saying living without it isn’t the end of the world.

Identity Theft Is Really Rare

In 2009, the RCMP received identity theft complaints from 11,095 Canadians. Wow, that’s the population of a small city! That’s a lot of identity theft, which is why everyone should be checking their credit reports regularly. Identity theft is a real threat!

Except it really isn’t.

During that same year, RCMP recorded 443,000 violent crimes across Canada. That means that the average citizen is 40 times more likely to be beaten up in a dark alley than having their identity compromised. Heck, you’re 3 times more likely to get robbed than having your identity stolen. (Especially in Winnipeg. Click the link if you don’t believe me. Oh yeah, Winnipeg sucks.)

What steps do you take to avoid being the victim of a violent crime? Like most people, you use common sense. You stay in well lit areas at night. You don’t spend a lot of time talking to drug dealers. And, just maybe, you should take the same approach with your credit score.

Comment on this post »

After watching many of episodes of ‘Til Debt Do Us Part by Gail Vaz-Oxlade (I love her so much), I started thinking about how it is so important, as a couple, to work together towards your common financial goals.

Money problems is the number one reason couples break up. Money, whether we like it or not, is symbolic for our values. We spent our money on things or experiences that we value. When one person in the relationship is spending like crazy on shoes, clothes, material items and the other person is busy saving up for the future, this is essentially where the values can clash.

When values clash, individuals within the relationship clash.  It makes for some very stressful situations and arguments.  It’s so easy to just want ‘out’ of the relationship to start off fresh and with a clean slate, just like it might be easy to want ‘out’ with the debt by filing for bankruptcy.

However, it’s not always about taking the easy road.  Bankruptcy has serious stigma associated with it, and for good reason. Filing for bankruptcy should be the absolute last resort. The bankruptcy scar will remain on your credit report for 10 years. It’s life changing and ranks up there along with death of a loved one, serious illness, changing jobs etc. as one of the most stressful events in our lives.

I think when you’re in the amount of consumer debt like the couples in the Til Debt Do Us Part show, it’s hard to realize how much debt you’re actually in, and how much paying the minimum payment will cost you in the future.

Serious change needs to occur as a couple to avoid continuing down the path to more debt.

(more…)

Comment on this post »

 

The following is a guest post by Mike Brains from Financial Facts, a site for “facts and advice on all things financial”. He shares some surprising (well shocking to me anyway!) information about credit reports that I didn’t know.

You may think your mother or your spouse are the people who know the most about you, but in reality your credit report may know even more than that. Before you apply for that credit card, personal loan or a mortgage it is essential to know exactly what is involved with a credit report. Waiting until you are applying for credit is not the time to be surprised about what shows up. Take some time now to review this information to make sure it is correct to minimize any problems in the future.

Your credit report will contain the following information:

(more…)

Comment on this post »

Here’s a guest post from Ed O’Brien about Credit Scores- I don’t know too much about credit scores because I never really had to worry about them (since I’m an angel and always paid my credit card bills on time lol), so I was very interested to see how credit scoring works here in Canada. Though when I got my credit score when I applied for my mortgage, I was surprised I was only in the 780′s.  I think this is likely because I have some unused credit cards that are just lying around.  Time for some spring cleaning, I suppose!

Your credit score is a number that evaluates the information in your credit report. A good credit score would indicate that you’ve been responsible with your credit accounts and have paid on time. A bad credit score reveals the opposite, that you haven’t paid your accounts on time or that you’ve had to file bankruptcy to deal with your debt.

Credit scores in Canada are calculated and sold by two major credit bureaus: Equifax and TransUnion. The scores range from 300 to 900. Credit scores above 800 are the best, 760 to 799 is good, the low 700s are fair, and below 699 is a bad credit score. Lenders place a lot of importance on credit scores during the application process because statistics show that consumers with the best scores are the least likely to default on their credit cards and loans. On the other hand, delinquency rates are very high with borrowers with credit scores below 600.

What a Good Credit Score Means

A good credit score put you in the best position to be approved for many credit cards and loans without having to go through a rigorous application process. Of course, mortgage and auto loan applications will be a more intense process even with a great credit score. Not only does a good credit score improve your chances at being approved, it also lets you get the best interest rates and terms on the loans you’re approved for. You may even have more access to instant approval loans and credit cards.

Things That Hurt Your Credit Score

There are things you do that will bring your credit score down and hurt your ability to get approved for new credit cards, loans, and other credit-based services. Here are a few things that hurt your credit score:

• Having too many accounts. Unfortunately, we don’t know the specific number of accounts that hurts your credit score, so keep your accounts on an as-needed basis.
• Having high account balances. Any credit card balance that’s above 35% of the credit limit is too high.
• Too few accounts or recently used accounts. The same way having too many accounts hurts your credit score, having too few accounts also hurts your credit.
• Loan balances too high compared to the original loan amount. The longer it takes you to pay off your loans from, including those from cash advance sources,  the more your credit score is affected.
• Applying for too many credit cards or loans within the past 12 months. Requesting a copy of your own credit report or credit score does not hurt your credit.
• Having a short credit history. A credit account that hasn’t been activated for very long since.

You have the power to get and maintain a good credit score by paying your bills on time every month – even utility bills and cell phone companies that don’t report positive payments, sometimes report late payments. Paying balances quickly will help your credit score since high loan and credit card balances negatively affect your credit score. Keep your new applications to a minimum. Apply only as needed.

Ordering Your Credit Score

Though you can order your credit report online or by mail, your credit score is only available for purchase online. You can check your credit score at either (or both) of the two credit bureau websites: Equifax.ca and TransUnion.ca.

Your credit score could be affected by errors on your credit report. If you review your credit report and find errors, you contact the credit-reporting agency and ask them to investigate the error or contact the business that listed the information and ask them to contact the credit reporting agency.

Ed O’Brien is an expert writer in personal finance, specializing in credit repair. You can find more of his articles located at CreditRepair.org.

Comment on this post »

Youngandthrifty’s thoughts: With the economy currently in distress, gas prices looming higher and higher, and the real estate market in parts of North America in the absolute pits, buying a home or keeping up with payments on a current home loan can seem like a very daunting task.  In order to prevent something called the “F” word from happening (Foreclosure… no, not the other word- get your mind out of the gutter!).

Tips for staying ahead of home loan debt

Having trouble making regular home loans repayments? Faced with foreclosure, or looking to rebuild your bank balance after losing your home to the banks? There may be options available that could improve your financial predicament.

When a lender takes steps to sell mortgaged properties and claw back financial debt from a borrower, often it is the last resort for the lender. In many cases, there are steps that borrowers can take to keep foreclosure from becoming a reality.

(more…)

Comment on this post »