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:

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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

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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.

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Here’s a guest post from Alban.  He is a personal finance writer at Home Loan Finder, a home loan comparison website.  Thanks Alban for such a detailed post on the “D” word!

Debt is something we all deal with in our everyday lives because we are all in some form of debt. Whether you have a car loan, a credit card or a mortgage, or whether you drive the car you bought with a car loan back to your mortgaged home, paying for fuel with your credit card on the way – we can all do with finding out how to better manage our debts.

1 – Know the types of debt

Debt is often referred to as either good or bad, where good debt is a home loan or investment loan which is held by an appreciating asset, where bad debt is high interest debt such as credit cards or personal loans which have been used to buy depreciating assets. However, these tags can be dangerous if you plunge into a large home loan or abandon the use of credit cards without understanding why.

Instead – keep in mind that bad debt is any type of debt you can’t afford. Your home loan could be bad debt if you borrow more than you can comfortably afford to repay, and your credit card could be good debt if you pay it off before the end of the interest free period and use the bank’s money while your money earns interest.

Therefore, the first thing you need to do when managing your debt is find out about the three true different types of debt:
1. Secured or unsecured. A debt is secured or unsecured based on whether there is collateral against which the loan has been secured. A secured debt is one which involves collateral and the collateral for a loan is usually also the reason for the loan – for example a car loan is secured against the car you purchase, and a mortgage is secured against your home. If you become unable to repay your secured debt and default on the loan, the lender is able to take the collateral of the loan, to cover the outstanding amount. Unsecured debt is one where you didn’t have to put up collateral, such as your credit card and as the amount you owe is unsecured, you often pay a higher interest rate.
2. Instalment or revolving debt. If you make the same repayment amount to your loan each month then you have an instalment debt, because the repayments have been calculated to repay a portion of both the principle and the interest accumulated, so that at the end of the loan term the debt is repaid in full. Revolving debt such as a credit card can have fluctuating repayments depending on the balance of the card and new purchases you have made. With an instalment debt there is no risk that your repayments or your loan amount will change because you have borrowed a specific amount for a specific purchase. With instalment debt you have security and reliability in your repayments and your budget.
3. The source. The issuer of the debt will determine the final features of the debt, most importantly the interest rate, because if you have a Visa card from ANZ Bank and a Visa card from Westpac Bank, the interest rates and fees will be different. This is why you always need to be aware of how your provider is categorising your debt as far as its features and usability.

2 – Know your debt

The next important step to managing your debt is knowing your current debt levels and circumstances. To do this, make up a list or a spreadsheet which includes:
The balances of all of your debts.
The interest rate you are being charged for each.
The term remaining on your contract if it is instalment debt.

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Here’s a guest post written by Andreas Nicolaides, a personal finance author for the UK based MoneySupermarket.com.

We are all faced with debt in our lives at one time or another, however, managing and controlling your debts is
an entirely different matter. Learning how to control your debts is a big learning curve, we all like to control our
finances in our own ways. My aim from this article is to detail what I believe is an effective way to getting started,
and hopefully I can help one or two of you as a result.

Face up to your debts

This first step of dealing with your debts is to acknowledge them, many people ignore the fact that they have a few maxed out credit cards, and they just let them sit in the background. Acknowledging your level of debt is the first step to learning how to effectively control it.

Analyse your debt

The first thing here is to analyse how much debt you actually have; I know this is a daunting prospect but knowing an approximate figure is the only way that you can set yourself a realistic long term goal. First grab yourself a pen and a piece of paper and note down all of your debts and how much you repay per month and per year. With this section try and be as thorough and as honest as possible.

Once you have a total debt figure you believe to be correct you can start by sorting your debts in order of importance. The debts you should be looking to pay off first should be the high interest ones; these should be attacked aggressively whenever you have some spare cash.

Cut down on your spending

Most people seem to enter the debt world by basically spending too much money, this section may be obvious for most of us but some people really struggle to spend less than they normally do, it’s more of a habit thing than anything else.

Cutting down on your spending should coincide with your financial plan; here are a few tips to get you started:

• Compare credit cards – Using a credit card comparison site you could quickly and easily save some money, you could compare how much interest you are paying from month to month and find a cheaper alternative card for you to use. Compare your bills – Using a price comparison site you can compare how much you are paying on your bills compared to other providers, don’t be afraid to switch if you find a provider offering the same service for cheaper

• Shop with a list – Taking a shopping list with you when you go shopping can help you save money by not buying unnecessary items, the key here though is to ensure you stick to the list, which can take a lot of will power

• Savings Calculator – Using a savings interest calculator can help you if you have a savings account, or if you are planning to open one to help you pay your debt. If you have any spare cash, you can identify how much interest you could possibly gain by using a savings account, and then use it to pay off some debt at a later date. I would however only advise doing this if your debts are not severe.

• Have a plan- Once you have analysed your debt and you have identified ways where you can save money, the next step is to set yourself an objective. It should be realistic and something that is measurable. You could for example aim to reduce your debt by $1000 over the next year; you need to set an aim that this realistic for you.

Remember that when trying to reduce your level of debt you will be hit by stumbling blocks, it’s all a big learning
curve and the main thing here is not to give up, in the long term you will see the benefits.

Y&T.ca’s Thoughts: These are great concrete suggestions to analyze your debt and cut down on spending.  I think it really helps to make a shopping list and stick to it.  I just came back from shopping last night and stuck to my list and was “over budget” by only $5.  I made sure I added up everything that was on sale in the flyer and ensured that I didn’t go over this time.  Also, facing up to your debts is huge, in my opinion.  The first step to ANY behaviour change is to acknowledge that the behaviour needs to be changed in the first place!

Readers, what do you think? Any other suggestions?

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