The holiday season is here! In this post, we cover some festive activities to explore near Halifax for a fun-filled December.
Is it time to analyze your credit score? Reviewing your credit score isn’t fun, and it’s not always easy, but it’s necessary for our financial health. Most of us use some form of credit, and keeping track of how we use it helps ensure we understand our position. Often, the hardest part is getting started. Here, we discuss how you can go about reviewing your credit score!
Is your credit score good?
To start, let’s examine where your credit score falls on the spectrum. According ro Equifax, credit scores can range from 300 to 900. Scores from 300 to 559 are considered poor, while 560 to 659 is average. Scores from 660 to 724 are good, 725 to 759 is very good, and 760 and up is excellent. The higher your score, the more likely you are to be qualified for lending products and credit, and vice versa for lower scores. Many banking sites allow you to check your credit score, and you can also do a credit check on Equifax or TransUnion.
What makes up your credit score?
Several factors contribute to your credit score. These are a few of the biggest things that influence your score, so take a moment to think about what they might reveal about your own credit.
Payment history is perhaps the most important part of your credit score. Just like it sounds, this examines how well you have made payments on your credit cards, lines of credit, student loans, and any other debts you owe. If you are consistent with your payments, they are always on time, and you even pay more than the minimum amount, these are good signs. It shows you are a responsible borrower, and your credit score will reflect this. However, if you have a history of late or missed payments, and you’re sometimes not able to meet the minimum payment requirements, your credit score will suffer. Think about your payment history when reviewing your credit score. Do the numbers seem to line up with your habits?
How long your credit history has existed
Another part of your credit score is the age of your credit history. The longer you’ve been using credit, and establishing your payment habits as consistent and timely, the higher your score is likely to be. Those with newer credit profiles don’t have the benefit of a lengthy history of golden behaviour to influence their score. It’s not a bad thing if this is part of why your score isn’t as high as you would like it to be. Just keep building your history and profile! Over time, you’ll see your score increase as long as you’re creating a good reputation for yourself.
How you use your credit
Credit utilization is a big part of reviewing your credit score. In an ideal world, your credit utilization would sit at around 30 per cent of your available credit. This means you’re using it enough to establish positive patterns, but not so much that you constantly seem on the edge of going over your limit. If you only use five per cent of your available credit, for example, lenders can’t gather as much information from you. This won’t push your score down, but it won’t help it rise either. Meanwhile, using 90 per cent of your limit shows you are pushing the limit constantly, often approaching the point of running out of credit. This will have a negative impact on your score.
How can you revise your score?
Part of reviewing your credit score might mean making a plan to increase it. If you find you’re not where you want to be with your credit, don’t worry! Nothing is permanent, and there are several ways to help bump up your score. Here are a few of the top methods.
Set a reminder to make payments on time
One of the most frustrating reasons your credit score may drop is because you simply have a bad habit of forgetting to make your payments. Life is busy, and try as we might, sometimes those bills just slip our minds. To combat this, use an easy preventative measure, and set reminders! However you choose to do this is up to you. Google Calendar, phone alarms, and written notes all work, or whatever works best for you. Sometimes a simple nudge is enough to remind you of your financial obligations, and by being more consistent with your payments, you’ll start to see a rise in your credit score.
Always meet the minimum payment requirements
Even if you are only able to meet the bare minimum payments on what you owe, this is much better than nothing. It’s important to always make your payments and if the minimum is all you can contribute, then pay that minimum! Late and missed payments will have a much worse impact on your credit score than small payments. We encourage borrowers to make payments above the minimum amount if possible, but meeting the minimum is a solid goal if you are new to building your credit score.
Finally, be mindful of your spending! As we mentioned above, credit utilization is important. Make a conscious effort to not spend too much or too little, so you can build your credit profile and increase your score. It’s easy to get carried away with credit because it feels like free money, but remember it always comes back to you. Don’t use credit to buy items you don’t need, if possible. Track your spending, and review your bank balance every week to make sure you’re not veering off course with credit usage.
Let a broker help
Reviewing your credit score can feel painful, especially if you find it’s not where you would like it to be. However, if you want to build and improve your credit, you need to take that first plunge. You can also let a mortgage broker help you as you embark on this credit building process. If you’re looking for mortgage products that would be suitable for your credit score, brokers can help match you with your options. We can also guide you on how to increase your credit score, and how to move forward if you’re dealing with more debt than you can handle. We’re here to help!
If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can contact us at (902) 482-2770 or contact us here.