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Tag: credit ratings

  • New to Canada? A new way to transfer your credit score – MoneySense

    New to Canada? A new way to transfer your credit score – MoneySense

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    The credit reporting company said Thursday that the Global Consumer Credit File will make it easier for immigrants to access services like loans and cellphone plans in Canada by providing the additional data.

    “It’s really important when newcomers land that they get access to the financial services ecosystem, and without credit history that’s very difficult to do,” said Sue Hutchison, head of Equifax Canada.

    “They’re typically looking to, you know, rent an apartment, get a mobile phone, probably a credit card, and all of those things require credit history. So not having it makes it very difficult for newcomers.”

    Earning, saving and spending in Canada: A guide for new immigrants

    What is Nova Credit? What does it offer?

    Equifax isn’t the first to launch such a program in Canada. San Francisco-based Nova Credit, which launched in 2016 to provide global credit score access, expanded into Canada last year in a partnership with Scotiabank.

    The company has since expanded with partnerships at RBC, BMO and Rogers Communications Inc., among others.

    Nova Credit partners with several credit bureaus, including Equifax, to provide data from more than 20 countries. With Equifax becoming a competitor in the space, Hutchison said conversations are underway around data access going forward.

    Foreign credit score sourcing with Equifax

    Equifax, which has operations or investment in 24 countries, will have the advantage of being the direct provider of data from its foreign bureaus, said Hutchison.

    “It’s going be coming directly from us. So that’s, I think, very attractive to the lenders themselves that they’ll be dealing directly with the credit bureau.”

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    The Canadian Press

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  • How to build credit history in Canada – MoneySense

    How to build credit history in Canada – MoneySense

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    How to get a credit card in Canada

    Well, you apply. But make sure you’re applying for the right card and that you have a high chance of being approved. You see, the credit card company will check your credit history, and that can affect your current credit score. So, don’t apply for a bunch and hope for the best, as that could make it look like you are at risk for having access to too much credit. The good news: There are many types of credit cards in Canada, including those for newcomers to Canada, students and even those with bad or no credit. Check out our rankings for the best credit cards in Canada for your situation.

    Once you have a credit card you will want to maintain good credit habits, like paying it off on time and paying more than the required minimum payment. Here are some other articles that will help you navigating your first credit card in Canada.

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    Why is credit history important?

    Say you want to rent an apartment. Your credit history is vital because most landlords will want to see your credit score and credit report to judge whether you’ll pay your rent on time. If you get the apartment, you’ll want an internet connection—and for this, too, the large providers will query your credit score.

    If you need to buy or lease a car, your credit history will not only determine whether you’re approved for a loan, but also what interest rate you’re offered: the higher your credit score, the lower the interest rate. Insurance companies may check your credit history before providing coverage. And finally, if you want to buy a home, your credit history is key to qualifying for a mortgage, as well as what mortgage interest rates lenders will offer. A lower rate could save you tens of thousands of dollars over the life of your mortgage.

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    How to build a good credit history when you have no credit history

    Credit history is usually built organically as people start using credit. In Canada, young people who have reached the age of majority (18 or 19, depending on where they live) can apply for a credit card and start building a history of borrowing and repayment.

    If you’re a newcomer to Canada, or if you’re a student, recent grad or young adult who doesn’t have much of a credit history, your credit score may be low—which is a hurdle in getting approved for credit. It’s a frustrating cycle—you need credit history to access credit, and you need credit to build that history. So, what’s the solution? Here are a few steps anybody can take to build their credit history:

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    Aditya Nain

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  • What happens if you don’t use your credit card? – MoneySense

    What happens if you don’t use your credit card? – MoneySense

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    If you find that you no longer need the credit, review any potential closure fees before deciding to cancel the card, too. Instead, you could look into downgrading the card, transferring balances, or using the card at least once a year for a small purchase to keep the account active.

    The impact of dormant cards on your credit rating

    Letting a credit card go dormant can impact your credit score in a few ways. As noted above as a con, if you don’t use a card for a long time, your credit issuer might close the account, which reduces your total available credit limit. For example, if your total credit limit drops from $10,000 to $8,000 with the account closure but your spending remains at $2,000, your utilization ratio rises from 20% to 25%. A higher ratio can negatively affect your credit score because it suggests you’re using more of your available credit.

    Having a mix of different credit types—such as credit cards, student loans, mortgages and car loans—helps maintain a healthy credit score. If a card is closed, you lose some of this diversity, which can also impact your score.

    Consistent on-time payments are crucial for maintaining good credit. Even if a card is dormant, missing payments can damage your score. To avoid this, pay more than the minimum payments on your credit cards and make all payments on time, every time. 

    It is important to review your credit report and score at least once a year to make sure there are no errors. You can obtain your credit report and score through Canada’s two credit bureaus, Equifax and TransUnion, a third-party service, or your bank’s website or mobile app. Even without any errors, regularly checking your report can help you better understand how your financial habits can affect your score and helps you see ways to improve it and manage debt better.

    Should you ever stop using your credit card?

    If you’re worried about letting your credit card go dormant, there are a few alternatives. Consider transferring balances from other credit cards or look at downgrading and switching to a no-fee version of the same card. Both of these options keep your account open and your credit utilization ratio low.

    You can also keep the card active by using it occasionally for small purchases, setting up a small recurring charge on it, or making it your go-to card for a regular expense, like buying gas. This helps keep your account in good standing without much hassle.

    How many credit cards is too many?

    There isn’t a set rule for how many credit cards Canadians should have in their wallets. The number of credit cards that is right for you depends on what you can afford to spend and pay back on time. Remember, it’s not just about the number of cards you have, but how responsibly you use them. 

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    Sandy Daykin

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  • Couples and credit scores: How your partner’s credit can affect yours – MoneySense

    Couples and credit scores: How your partner’s credit can affect yours – MoneySense

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    Should I get a joint credit card with my partner?

    While your partner’s credit score won’t directly impact your credit score, joint accounts or adding the other as a co-applicant will. The one exception is adding your partner as an authorized user to your credit cards and banking accounts. 

    When added as an authorized user, your partner is able to use the credit card but cannot make any changes to the account. Their credit will also not be impacted in any way. However, when a partner is added as a co-applicant, they have to go through the required credit checks and both partners’ credit is impacted based on usage of the account.

    Joint accounts can be beneficial when both partners are on the same page with money. For example, a joint account can give you access to a larger borrowing limit. It also can simplify your finances and foster feelings of partnership. However, depending on your partner’s money habits, sharing a joint credit card could be a real risk to your money and your credit score.

    If either of you miss a payment on a joint account or run up a large balance, each of your credit scores can take a hit. On the other hand, if you and your partner always make your payments on time, both of you will see improvement in your credit scores as the joint account will show up on both of your credit reports. 

    Getting extra credit through a joint credit card might seem like a good idea, be sure to assess each of your financial situations before doing so as gaining new credit can influence financial behaviours. Be critical about how having more or less credit affects your ability to live within your means and pay off your debt in full each month. If you or your partner have any debt, the focus should be on paying it down. Only consider a new, joint credit card if you have paid off your individual debts first.

    How to maintain healthy credit history (and prevent debt) as a couple

    Before combining finances in any way, such as joint credit cards or loans, it is imperative that you and your partner are in agreement and have the same expectations. To maintain healthy credit and prevent debt, consider the following five things: 

    1. Make sure your partner is someone you can trust to properly budget by having open and transparent conversations about money. 
    2. Set boundaries on how the joint account or loan will be used, as well as spending limits. Some couples ensure they both agree on a purchase beforehand, whereas others may check in at the end of the month to ensure all spends are accounted for—it’s good for catching credit card fraud, too, since you never assume it was the other person.
    3. Agree on who will make payments to ensure they’re made on time.
    4. Decide the amount you each will contribute to shared expenses. Will it be 50/50 or a percentage based on your incomes?
    5. Discuss what happens if one of you can’t make a payment due to income loss or illness. What’s your backup plan?

    Money isn’t worth fighting about—but it’s worth talking about

    Discussions about finances aren’t always easy. They might cause stress, tension and arguments with your partner. But, the more you practice communicating with honesty and intention, it does become easier. 

    None of this is to say your partner having a sub-par credit score should be a deal breaker. In fact, it’s fairly simple to start rebuilding credit. As professionally certified credit counsellors with Credit Canada, we often help couples understand their credit and address debt. If you need additional support, contact us today to book a free credit-building counselling session.

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    Sandy Daykin

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  • The risks of credit repair companies in Canada – MoneySense

    The risks of credit repair companies in Canada – MoneySense

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    Some companies claim they can repair your credit and solve your debt problems quickly. However, you can only rebuild credit and there’s no quick fix to do so. We’ll walk you through why you should be skeptical of companies offering credit repair services and explore other ways to rebuild and maintain strong credit. 

    The importance of strong credit in Canada

    It’s important to have a good credit score so you can get a loan, be approved for a credit card, buy a home and a car. And you want to get the best interest rates when doing so. A credit score may also determine whether a landlord approves your rental application, and employers might even consider credit histories in their hiring process. Having a strong credit score shows you are good at managing debt and credit. In contrast, bad credit suggests you are a risky bet to lenders because you may be having problems with money. 

    Why someone might reach out to a credit repair service

    The average Canadian owes more than $21,000 in consumer debt. When you have a lot of debt and other monthly bills to take care of, it can become difficult to manage and make all of your payments on time, especially amid high inflation and rising costs of living. However, if you don’t manage your payments on time, your credit score will take a hit. Feeling desperate in a financial situation can cause anyone to make a bad decision. But many people run into further financial problems by trying to repair their credit with a quick fix.

    How credit repair companies work

    Credit repair companies say they will repair your credit by removing negative information from your credit report, thus boosting your credit score—for a costly, upfront fee. They may also offer to negotiate with credit reporting agencies to improve your credit score or encourage you to take out a high-interest loan to pay off your debts. Be aware that these credit repair companies make money from fees, set-up costs and interest, so you may be left with even more debt without any changes to your credit score.

    These companies often take advantage of the fact that many Canadians don’t know you can’t remove accurate information from your credit report—even if it’s bad. You should be skeptical if a company says they can remove accurate, negative information from your history.

    Pay attention to the warning signs

    Many Canadians run into further financial problems as they attempt to “repair” their credit because they fall victim to credit repair scams. Credit repair services are different from not-for-profit credit counselling agencies. The latter are typically a free service offering non-profit financial education and advice. But back to the scams, here are the warning signs that a company offering credit repair services is likely a scam: 

    • They request an “upfront” payment (this is illegal under Canadian consumer protection laws)
    • They offer instant approval for loans or other credit products without fully understanding your financial situation
    • They call themselves a “credit repair company” 
    • They request payment by gift cards
    • They use high-pressure sales tactics
    • They say they “erase” your negative credit information
    • They don’t provide a transparent contract (or any contract at all)
    • They warn you against contacting a credit bureau

    How to rebuild your credit in Canada

    Accurate negative information on your credit report cannot magically go away; it’s there until it falls off your credit report, which takes about six years. If your credit report isn’t great, the only way you can go about “fixing” it is by rebuilding it with a positive credit history. You have to show your creditors that your financial habits have improved, which takes time. Here’s what you can do to get the ball rolling: 

    1. Review your credit

    It is important to review your credit report regularly by getting a free copy of your credit history from both Equifax Canada and TransUnion. Look over the report to see what’s documented and if the information is correct. For no charge, you can remove incorrect information by filing a dispute with the credit reporting company.

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    Special to MoneySense

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  • Moody’s lowers U.S. credit-rating outlook to negative, warns ‘fiscal deficits will remain very large’

    Moody’s lowers U.S. credit-rating outlook to negative, warns ‘fiscal deficits will remain very large’

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    Moody’s Investors Service turned negative on the US’s credit rating outlook Friday, citing risks to the nation’s fiscal strength and political polarization.

    The rating assessor lowered the outlook from stable, even as it affirmed the nation’s rating at Aaa, the highest investment-grade notch.

    “Downside risks to the US’ fiscal strength have increased and may no longer be fully offset by the sovereign’s unique credit strengths,” William Foster, a senior credit officer at Moody’s, wrote in a statement. “In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”

    Moody’s, which is the only remaining major credit grader to assign the US a top rating, said the Aaa affirmation reflects that the US’s formidable credit strengths still preserve its credit profile.

    In a statement, White House Press Secretary Karine Jean-Pierre said the outlook change was a “consequence of congressional Republican extremism and dysfunction.” Deputy Secretary of the Treasury Wally Adeyemo, meanwhile, pushed back against the outlook change, saying the “American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset.”

    Moody’s had earlier hinted at a potential downgrade, saying in a Sept. 25 report that while “debt service payments would not be impacted and a short-lived shutdown would be unlikely to disrupt the economy, it would underscore the weakness of US institutional and governance strength relative to other Aaa-rated sovereigns.”

    Fitch Ratings has the United States’ sovereign rating at a score of AA+, one notch below its highest mark, after the credit assessor downgraded the US government in August following the latest debt-ceiling battle. S&P Global Ratings has it at a score of AA+, also just below its top grade, having stripped the US of its top score in 2011 on the heels of an earlier debt-ceiling crisis.

    Ten-year Treasury note futures dropped after the announcement, reaching fresh session lows. The yield on US 10-year Treasuries, meanwhile, extended back through 4.65% and ended the session matching the highs reached in the Asia session.

    The government’s credit plans have been in particular focus after the Treasury last week announced that it would borrow $112 billion in quarterly refunding and said it expects one more step up in quarterly issuance of longer-term debt.

    The US also faces a government shutdown on Nov. 18 if Congress doesn’t come to an agreement to pass short-term spending bills. These economic disruptions would come at a challenging time for investors, who already have to contend with a toxic mix of large US fiscal deficits and persistent inflation.

    “Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability,” according to Moody’s.

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    Carter Johnson, Bloomberg

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