Managing your credit
In today's challenging economy managing your credit history is as important as managing your working career. Proven credit histories open the doors to more than just an ability to borrow money. Depending on your circumstance potential employer(s) may request access to your credit file prior to any offer of employment. It is unfortunate to think that a slow repayment experience with a lender can potentially disqualify a job applicant — but it happens.
From the first time a student applies for credit, a credit report is generated and stored at Canada's two main credit reporting agencies: Equifax Canada (www.equifax.ca) and TransUnion Canada (www.tuc.ca). Credit reports contain a wide range of personal consumer data including demographic information, address information, employment information, banking information and credit repayment histories. Credit reports also contain information such as the number of times you have applied for credit and your experience with chequing and savings accounts.
Lenders use the credit report in attempt to build a risk assessment as it applies to a borrower's credit worthiness from a character perspective. In essence lender attempt to determine “what is the likelihood of this borrower repaying this debt”? Even borrower's who have a demonstrated ability to repay a loan (i.e. significant income or savings) will struggle to obtain credit if he/she has a track record of slow repayment with other creditors.
Your personal credit history is something that you should work to protect each and every month. Missing one or two monthly installments on a credit card bill will quickly erode your credit worthiness and document the slow re-payment activity for up to seven years from date of occurrence.
In my past experience in a lending capacity it was truly unfortunate to decline former students who have graduated, secured employment and now are hoping to make their first major purchase (i.e. car or house). When they find out they have been declined because of a couple missed payments or written off account that occurred when they attended school, they become frustrated, upset and embarrassed.
Consumers with strong credit histories typically exhibit a discipline to only borrow amounts of money that is affordable to repay. Having said this, it is a fact that the national economy is experiencing an economic downturn and conditions may be deteriorating to the point where it becomes impossible for some consumers to make all their payments each and every month.
If it happens that payments cannot be made in a given month communication with the lender is essential. Lenders will often accommodate a temporary inability to pay by revising the payment terms as required and within reason for an agreed upon period of time.
When repayment of a debt becomes unlikely (ex. Job loss) a borrower may have to cash in savings, sell collateral, borrow from a family member or seek credit counseling, or at worst, bankruptcy protection.
The worst thing a consumer can do is ignore his/her repayment issues. The quicker you address and resolve the issue the better off all parties will be.
Students who are interested in learning more about their credit histories should visit the Credit Bureau websites listed earlier in the column.
Any consumer can access his/her personal credit bureau for free OR download the information for a nominal fee. It is important to validate the information that is being recorded on your file and report any incorrect information.
Editorial opinions or comments expressed in this online edition of Interrobang newspaper reflect the views of the writer and are not those of the Interrobang or the Fanshawe Student Union. The Interrobang is published weekly by the Fanshawe Student Union at 1001 Fanshawe College Blvd., P.O. Box 7005, London, Ontario, N5Y 5R6 and distributed through the Fanshawe College community. Letters to the editor are welcome. All letters are subject to editing and should be emailed. All letters must be accompanied by contact information. Letters can also be submitted online by clicking here.
From the first time a student applies for credit, a credit report is generated and stored at Canada's two main credit reporting agencies: Equifax Canada (www.equifax.ca) and TransUnion Canada (www.tuc.ca). Credit reports contain a wide range of personal consumer data including demographic information, address information, employment information, banking information and credit repayment histories. Credit reports also contain information such as the number of times you have applied for credit and your experience with chequing and savings accounts.
Lenders use the credit report in attempt to build a risk assessment as it applies to a borrower's credit worthiness from a character perspective. In essence lender attempt to determine “what is the likelihood of this borrower repaying this debt”? Even borrower's who have a demonstrated ability to repay a loan (i.e. significant income or savings) will struggle to obtain credit if he/she has a track record of slow repayment with other creditors.
Your personal credit history is something that you should work to protect each and every month. Missing one or two monthly installments on a credit card bill will quickly erode your credit worthiness and document the slow re-payment activity for up to seven years from date of occurrence.
In my past experience in a lending capacity it was truly unfortunate to decline former students who have graduated, secured employment and now are hoping to make their first major purchase (i.e. car or house). When they find out they have been declined because of a couple missed payments or written off account that occurred when they attended school, they become frustrated, upset and embarrassed.
Consumers with strong credit histories typically exhibit a discipline to only borrow amounts of money that is affordable to repay. Having said this, it is a fact that the national economy is experiencing an economic downturn and conditions may be deteriorating to the point where it becomes impossible for some consumers to make all their payments each and every month.
If it happens that payments cannot be made in a given month communication with the lender is essential. Lenders will often accommodate a temporary inability to pay by revising the payment terms as required and within reason for an agreed upon period of time.
When repayment of a debt becomes unlikely (ex. Job loss) a borrower may have to cash in savings, sell collateral, borrow from a family member or seek credit counseling, or at worst, bankruptcy protection.
The worst thing a consumer can do is ignore his/her repayment issues. The quicker you address and resolve the issue the better off all parties will be.
Students who are interested in learning more about their credit histories should visit the Credit Bureau websites listed earlier in the column.
Any consumer can access his/her personal credit bureau for free OR download the information for a nominal fee. It is important to validate the information that is being recorded on your file and report any incorrect information.
Editorial opinions or comments expressed in this online edition of Interrobang newspaper reflect the views of the writer and are not those of the Interrobang or the Fanshawe Student Union. The Interrobang is published weekly by the Fanshawe Student Union at 1001 Fanshawe College Blvd., P.O. Box 7005, London, Ontario, N5Y 5R6 and distributed through the Fanshawe College community. Letters to the editor are welcome. All letters are subject to editing and should be emailed. All letters must be accompanied by contact information. Letters can also be submitted online by clicking here.
