12 Jan Importance of Having a Strong Credit Score in London, Woodstock, and Ingersoll
Just a few years ago, few Canadians had heard of a credit score outside of applying for a mortgage and even fewer cared about it. As Canadians have become more financially sophisticated, we are increasingly more concerned about our credit score.
Many individuals contact us about avoiding bankruptcy in London, as they believe this might negatively impact their credit score. This blogpost will focus on what a credit score is, why it is important, how bankruptcy impacts your credit score and what you can do to improve your credit score.
What is a Credit Score?
There are two key pieces of information about your credit – your credit report and your credit score.
The credit report is a record of your past and present use of credit cards, loans, internet and telephone bills and other forms of credit. There are two major credit reporting agencies that maintain these reports TransUnion Canada and Equifax Canada.
The credit score gets all of the glory, but it is simply a three-digit number created by a mathematical formula that reflects the information in the credit report.
Why is a Credit Score Important?
A credit score or credit report can be very important for access credit or even obtaining an apartment. Lenders and other institutions use the credit report and/or score in determining whether to approve or refuse applications to rent an apartment, obtain a mortgage, open a line of credit or get a credit card.
A poor credit score or credit report may mean that you get approved for a loan or credit card, but are required to pay a higher interest rate due to the higher risk.
Being denied access to a financial product your want or being forced to pay thousands of dollars in higher interest rates is not what you want. Your credit report and score are very important for financial freedom.
How does Bankruptcy Impact Your Credit Score?
Failing to pay your creditors on time can have an adverse impact on your credit report and score. You should not delay getting debt help for fear that it would adversely impact your credit score, your credit score is already affected by failing to pay creditors the minimum amounts on time.
Both consumer proposals and consumer bankruptcies are reported to the credit reporting agencies by the Office of the Superintendent of Bankruptcy. A first bankruptcy will remain on your credit report for up to seven (7) years after discharge and a consumer proposal will remain on your credit report for three (3) years after all payments are completed.
How Can You Improve Your Credit Score?
There are steps you can take to improve your credit score over time.
Pay your utility bills on time including phone, electricity, internet, cable, etc. While these are not all reported on your credit score, missed payments often are, so it is important to pay these bills on time.
Make at least the minimum payments on your credit card and try to pay off the balance in full when possible. On the subject of credit cards, try to keep your credit card balance below 1/3 of the maximum allowable and avoid maxing out your credit card.
Finally, reduce the number of credit card or loan applications you make. Numerous lenders requesting your credit report at the same time may have a negative impact on your score.
Having a strong credit score is very important. If you are seeking to avoid bankruptcy in London and area to maintain a high credit score, you should speak with McLennan and Company Ltd. today.
At McLennan and Company Ltd. we focus our work on helping individuals and families who want to start over financially through debt help, consumer proposals and where necessary, bankruptcy. Contact our head office in London, Ontario at 519-433-4728 or fill out our online form and someone will contact you within one business day to schedule a consultation.
We know that this is a difficult time for you and your family and we offer free initial consultations. For your convenience, in addition to our office in London, we also have satellite offices in Ingersoll and Woodstock and offer flexible appointment times.