Credit Scores - how do they work?

Which factors affect my credit?

• Your payment history – do you pay the bills on time? Are your utilities always being cut off?
• How much you owe – car leases, mortgages, lines of credit, credit cards
• How long your credit file has been open
• How many times you hae applied for new credit – do you continually apply for store cards and credit cards from different financial institutions?
• The type of credit you have – there is good credit and “bad” credit
• Collections items or judgments registered against you affect your credit score negatively

It isn’t just about what you owe! Here are a few other things for you to consider - for example, do you:

• Have savings that you add to on a regular basis and that is proportionate to your income This includes long term retirement savings.
• Constantly move and change employment? Having a stable address and job is very important.
• Use your bank account properly – overdrafts and NSFs can signal financial difficulty.
• Pay more than the minimum payment due each month on a credit card and work on bringing the balance owing down.
• Limit your use of the card until it is paid in full.
• Only apply for credit that you need. One, maybe two credit cards, with very reasonable limits based on your income, are all you should need.
• Keep all credit card balances well below the limits on all of the cards at all times.
• Reduce your monthly debt payments (excluding mortgage payments) to no more than 15 – 20% of your take–home pay. This will allow you to manage unforeseen financial challenges effectively.
• Keep credit limits reasonable – if used or charged to the limit, you should be able to pay the full balance off within a year and leave it paid off.

Good AND bad, everything stays on your credit file for 6 – 7 years, so time could be on your side.

Managing your money is a skill that can be learned, Solid financial literacy means you can get the most from the money you have now!

We can help you to do this while you move into a home of your own. It’s never too late to start on the road to a brighter future.