How to protect your credit rating
Credit Bureaus usually monitor individuals and corporate entities debt levels, credit utilization, credit payment history as well as types of credits in calculating credit rating. Some of the largest credit bureaus in Canada are Experian, Equifax and Trans Union. Credit rating is of paramount importance to individuals and companies alike. It is forms a basis for future credits including mortgages and auto loans, opportunities for consumers, employment and so forth. It is thus important to protect your credit rating. Invest your resources wisely to keep your credit rating ‘in shape’. It will be to your own detrimental to fail to do that. Discussed below are some of the things you can do to protect your credit rating.
- Always provide updated and current information to your creditors. For instance, if you move from your current physical address then it is wise to forward the updated addresses to your lenders. This will ensure that you get all the bills and other relevant information on time for your action.
- Ensure that you settle any dispute with your creditors amicably. This will prevent the creditor from posting disputes on your credit rating. If you do not take the necessary measures to solve disputes amicably, they will be posted on your credit report and will hurt your scores badly. If you are not in a position to agree with your creditor then you should seek the assistance of professionals to mediate.
- Limit the number of enquiries on your credit bureau. For instance, if you had applied for a loan and it was turned down then you should try not to apply for other loans. This is so because the more the number of credit checks you have, the lower your credit rating will be. It is advisable that you first seek the reason of decline before applying for another loan. This will enable you to know the best strategy to employ when applying for the next loan to avoid having so many credit checks on your credit bureau.
- Pay off the debts with the highest interest rates first. The longer you take to repay your outstanding amount, the higher the total payable. This might give you a very big financial burden that you cannot handle since run into debt rut. This will affect your credit rating negatively. Therefore, to avoid this from happening it is good to pay off debts that have high interest rates first. You should try as much as possible to pay them as fast as you can to avoid accruing.
- Always have a personal budget. A person budget is very instrumental in protecting your credit rating. This is because when you have a personal budget you will be in a position to manage your finances appropriately. This will enable you to pay bills on time and only spend what you have. It instills financial discipline into you which helps you to achieve financial stability at the end of the day. This goes a long way to protecting your credit rating.
- You should also never co-sign for a loan unless you are willing to pay the debt yourself incase the borrower defaults.
Thousands of dedicated and hardworking Canadians fail to secure loans because of poor credit ratings. It is your responsibility as an individual to make deliberate efforts to improve and maintain your credit rating.