Crediteria Credit & Finance

May 11, 2006

Re-establishing Your Credit Rating

Whenever you fall off the track, your credit rating gets bruised. If you want to be considered a good risk, you have to work at reestablishing your credit rating. One way is to get a secured credit card and make your payments faithfully. A secured credit card is one that is fully secured, meaning there's no risk to the credit card company. What you do is provide the credit card company with enough cash to cover your balance. Financial institutions typically want twice the amount of credit you're asking for. So if you want a credit card with a $500 balance, you must put up $1,000 in cash. After you've made regular payments for about a year or so, the financial institution will drop the security requirement and return your deposit.

Banks and financial institutes are forgiving and want your business however they also need to trust that you will repay your debts. It is important to avoid a debt over-burden especially with rising energy costs.

Let's face it, the cost of living is going up and wages are not matching the rise in day-to-day expenses so approach debt with caution and factor in what it really costs to make ends meet and plan your credit and loan applications accordingly.

It's as simple as "wait until next week to determine if you really need it" before applying for any credit.

April 18, 2006

I've Never Had a Credit Card in My Own Name. What Do I Do?

Some people have difficulty establishing that they even exist when it comes to getting credit. If you are a married woman and all the cards are in your husband's name, even if you make the payments on the card, you're contributing to his credit rating, not your own. The card company doesn't care who signed the cheques. They base their reporting to the credit bureau on whose name the card is held in.

Women who are recently divorced or widowed often face the shock that they don't exist simply because all the credit reporting was done in their husbands' names. If you are a married woman, make sure you have at least one credit card in your own name. You'll have to apply for it and qualify for it on your own. Initially, you may have to use a secured credit card (see page 16). However you get your card, make sure you use it wisely so that the reputation you develop is a good one.

The other way to become known is to open up a chequing account with your local financial institution and get to know the branch manager. You'd be surprised at how far a personal relationship with a banker can take you. After all, the more familiar she is with you, the more likely you are to get the service you want, when you want it — including getting credit.

If you're new to the workforce or a recent immigrant, the same advice applies. Establish a relationship with a financial institution, borrow some money (using a guarantor, if necessary) and start building your credit reputation.