CreditCare.ca
144 - 50th Avenue SE T2G 2A8 Calgary, AB, Canada

"How Quickly Does Paying Off Debt Fix My Credit Score? (Part 3)" This week we will conclude our 3-Part series on this topic. We will touch on a couple of additional areas regarding debt including Mortgages and paying off Credit Cards Accounts. Mortgages - Outstanding debt can be a very big red flag when applying for a mortgage. It is important to mention that many mortgage companies will not approve a client with any unresolved debt no matter how small the amount.... Credit Card Accounts - Your goal should always be to keep your utilization of the credit card under 30% at the reporting time. Utilization is the ratio between the amount of money you have out vs. the credit limit on the card. Closing Credit Card Accounts - Some clients after they have had difficulty paying off a credit card account will close it. This is not always the best strategy for a couple of reasons: (1) Lose the reporting - If you will be able to keep your credit utilization in check there is a benefit to your credit score. If you close the card this potential increase to your score is gone. (2) Potentially raise your credit utilization - Part of your credit score is a calculation of your credit utilization. Closing a credit card can have the adverse effect of increasing your remaining ratio of credit utilization and result in your score coming down. (3) Time on bureau - Part of your credit score is your time on the bureau. If the card you are thinking of closing is your oldest trade line, closing it can potentially lower your score. Next week we share how CreditCare.ca can help you build your credit score and be an invaluable part of your credit building strategy. The topic of next Wednesday's post is: "The Benefits of CreditCare.ca" Please send your credit questions via email to [email protected] and we would be happy to answer them. Follow this link to our previous Credit Advice and Frequently Asked Questions: http://ow.ly/vtUq50AfzBN

This weeks credit topic is: "How Quickly Does Paying Off Debt Fix My Credit Score? (Part 2)" Continuing from last week there are many benefits to paying off debt beyond just raising your credit score and these can include:... - Applying for new credit - Renting an apartment Potential creditors are always looking for positives when making credit decisions. The past is the past, what is most important is your credit behavior since the difficulties. Unpaid Collections & Potential Creditors - When a potential creditor looks at a credit bureau and there are numerous small unpaid collections it really sends the wrong message. If you are working on fixing your credit, and this looks like your report, one of the best things to do is start by paying off the small debts first. If the choice is paying off one larger debt or a few smaller ones, pay the smaller ones. When the funder looks they will then see a lot more "Paid" that "Unpaid" reports. Installment Loans - Many times people will pay off an installment loan in order to save on the amount of interest they are going to pay. This is a good thing but be aware it can have the following two effects. (1) When a installment loan is paid off it stops reporting to the credit bureau on a monthly basis. This may result in a temporary drop in your score, although this normally recovers in a month or two. (2) Installment loans build your credit faster than a credit card, which is referred to as "Revolving Credit". As we conclude the series next week we will share how CreditCare.ca can help you with this. Next week we will continue on this topic and discuss some additional information you should know. The topic of next Wednesday's post is: "How Quickly Does Paying Off Debt Fix My Credit Score? (Part 3)" Please send your credit questions via email to [email protected] and we would be happy to answer them. Follow this link to our previous Credit Advice and Frequently Asked Questions: http://ow.ly/vtUq50AfzBN

This weeks credit topic is: "How Quickly Does Paying Off Debt Fix My Credit Score? (Part 1)" This is a common question we get asked. A client will make a credit inquiry and when the credit bureau is pulled the debt does not show as paid. This can be either on the trade line reports or in the collections section.... Once you payout a account in full the lender should report the "Account Paid" status on their next reporting cycle. Some consumers think this happens immediately but it could take from 30-45 days depending on the time the account is paid out and the lenders reporting cycle. When you pay off a debt get a copy from the creditor. Having this will allow you to prove the debt has been settled and can fill in the gap in time between the payout and when it reports on the credit bureau. We always recommend, once a debt is paid in full, waiting for up to 60 days and then ordering a copy of your bureau just to make sure your credit bureau is reporting the paid debt and has been updated correctly. Remember, just because you have paid off an outstanding debt this will not immediately raise your credit score. Don't despair as there is an immediate benefit to paying of bad debt as most potential creditors view your file in a more favorable light being able to see you are trying to make things "Right". The reason your score will likely not change immediately is due to the fact your credit report is designed to rate you credit behavior over time. Paying off debts will help but it needs to be part of a long term plan to built your credit score. Next week we will continue on this topic and discuss some additional information you should know. The topic of next Wednesday's post is: "How Quickly Does Paying Off Debt Fix My Credit Score? (Part 2)" Please send your credit questions via email to [email protected] and we would be happy to answer them. Follow this link to our previous Credit Advice and Frequently Asked Questions: http://ow.ly/vtUq50AfzBN

This weeks credit topic is: "How Bad Credit Affects A Mortgage (Part 2)" Last week we looked at some of the negative affects bad credit can have on a mortgage for both first time home buyers as well as people buying their second home or renewing their mortgage including: Interest Rate / Lower Mortgage Amount / Larger Down Payment & Mortgage Term. All of these can combine to make it difficult to get into the home you want. ... The good news is there are some pretty simple ways to improve your credit if your problems are a result of credit cards and skipped payments. That is what this week is about. CREDIT CARD LIMITS - You should aim to have your credit usage no higher than 30% of the card limit to have it benefit your score and under 50% so it does not hurt it. If your credit card balances are high this is a great place to focus your efforts. Get this in check and your credit score will improve. DON'T MISS MONTHLY PAYMENTS - Make your monthly payments regularly as this is one of the things that can drop your score quickly but by correcting this behaviour it is one of the fastest ways to have your credit recover. NEW POSITIVE CREDIT - Changing the focus off your past issues to new and positive credit is a great tool. If you can afford to make a $19.53 Bi-weekly payment you can start a CreditCare.ca savings account that will report to the bureau and build your credit while growing your savings. If you know you have more serious credit issues I recommend seeing a Certified Credit Counselor. Yes, this will cost you some money but having professional help usually saves you both money and time in the end. The topic of next Wednesday's post is: "How Quickly Does Paying Off Debt Fix My Credit Score?" Please send your credit questions via email to [email protected] and we would be happy to answer them. Follow this link to our previous Credit Advice and Frequently Asked Questions: http://ow.ly/vtUq50AfzBN

This weeks credit topic topic is: "How Bad Credit Affects A Mortgage Approval (Part 1)" This week we look at some of the negative affects bad credit can have on a mortgage for both first time home buyers as well as people buying their second or third home. A change in credit rating can also effect people looking to renew their current mortgage. Interest Rate - The most obvious is interest rate. A lower credit scores result in higher interest rates and a difference of just... 1% can add up to a lot of money over the life of a mortgage. For example over 30 years on $500,000 this can be $90,000 in additional interest!! Mortgage Amount - A lower credit score can also result in a lower approval amount even if the income level is high enough to service a larger debt. Down-payment Required - One of the ways lenders can lower their risk to clients with lower credit is to require larger down payments. Mortgage Term - Depending on the lender a lower credit score can result in them only offering a shorter term. Obviously a shorter term raises the monthly payment amount. All of the items above can combine to make it difficult to get into the home you want. Not having the amount of down-payment required to monthly payments that just don't fit your budget can all result in you either not being able to buy a home to not being able to own a home the right size or in the right area for you and your family. The good news is there are ways to improve your credit, some potentially are quite simple, as part of a plan to make owning a home a reality. We look at these in next week's post. The topic of next Wednesday's post is: "How Bad Credit Effects A Mortgage Approval (Part 2)" where we look at some solutions to get you on track. Please send your credit questions via email to [email protected] and we would be happy to answer them. Follow this link to our previous Credit Advice and Frequently Asked Questions: http://ow.ly/vtUq50AfzBN