3. Is credit important – Absolutely!

At some point in your life, you will have had need, to apply for something and the institution will ask for your consent to pull credit. Maybe you wanted access to credit, a loan, or a mortgage. Or sometimes you may be applying for something for a business, a school, or job application. Most people have a vague understanding that they have credit or need credit but that is about the extent of it. As for the question … Is it any good or is credit important? The understanding is confusing.

In my opinion credit is one piece of an important pie that will help you to obtain the options and goals that you would like in your life. Some people can be successful without “credit” in the traditional sense depending on relationships. The original credit worthiness was truly based on work ethic and moral character that they have proved worth, in certain arenas. People who show up, do what they say they are going to do, have in the past earned peoples trust that they will follow through and complete that task that they are being asked to do. That person earned credit (trust).

In the simplest form credit profiles show how, that have borrowed and paid back the money. To what extent they have paid in a timely and consistent manner then builds a stronger or weaker financial file for that person. Each person is encouraged to build their own personal financial credit for possible future investment opportunities. Husbands and wives should each have a little independent credit.

Earning a good credit score is very important. As the world becomes smaller and we as a society do business outside of our communities. Local relationships we build daily are with now larger institutions who do not know us. They use your credit rating to gauge trustworthiness in management or key employment positions. Young people are advised that when they have a regular income, apply for a small personal loan and credit card. At one time a personal loan with a co-signer was the way to go now most people start with a credit card. The co-signer is there to say. “yes” they will pay and if not, I will pay. Once that loan is paid without trouble then you can obtain your own loan without a cosigner. Credit cards can sometimes require a cosigner. Unfortunately, 1^st time credit card applicants, typically start bad as they do not have the discipline it takes to manage their money through using a credit card. Prepaid cards are NOT credit and DON’T build your profile.

Where to start - Obtain credit:

1. pay it all off, (or something at min) each month.
2. IF having difficulty paying off all off each month. STOP USING pay off but don’t cancel the card.

Continue reading to - Best Practice:

1. Have at least 1 credit card (or Loan) in your personal name (no co -signer).
2. Keep all spending below 50% utilization. Limit $1000 spend $500.
3. Build a strong credit card rating by having the money in the bank but use the credit card to buy it (now a days to earn point) and then pay full bill off on or before the due date. That is ideal.
4. If you get in credit card problem meaning cannot pay full bill off when it is due.
   1. Pay minimum if nothing else each month until you pay it off.
   2. Do not cancel your credit card. It is better to have a card you do not use then cancel. (Length of credit)
5. If you have difficulty in keeping to those 4 best practices, then limit credit card use or take your card and lock it up and do not use it until you pay it off.

Melinda Baker

Mortgage Agent M21000893

Verico The Mortgage Station 11707

Phone: 705-220-1608

melinda@themortgagestation.ca

mortgageweb.ca/melindabaker