Written for: GO Easy Financial
Perfect Credit
You’ve done all your homework. You’ve been responsible. You’ve followed all the rules, paid your bills on time, and avoided debt. No matter what credit bureau you check with, your score is looking pretty impressive. So what now?
While achieving a “perfect” credit score is nearly impossible, an excellent credit score is generally considered to be between 750-850—and having a very good one can open plenty of doors. For example, any new loans you take out will likely come with favourable interest rates, and you won’t have to go through the trouble of securing a co-signer or any collateral. You might receive invitations to qualify or “pre-qualify” for certain financial products, and you may find yourself receiving offers to increase your credit limit. Indeed your financial life can be easy sailing if you adhere to the formulas devised by credit bureaus to calculate your credit score.
But its important to remember that these matters are fickle—and keeping a close eye on your finances is more important now than ever. It may come as a bit of a surprise to know is that often, those special offers from banks can be a bit of a trap.
“It’s a marketing strategy,” explains Elena Jara, Director of Education for Credit Canada Debt Solutions Inc. “They say you ‘pre-qualify’ but they will still check your score again. And you will lose points.”
Keeping track of inquiries on your credit history is also crucial, she adds. “Utility companies, insurance and service providers are now checking your credit report. And 30 points drop from your score every time there’s an inquiry from a third party.” So she advises to always come prepared with your own credit report as much as possible to avoid losing points.
Yes, credit itself can be tricky: the way you use your credit products and services can work in your favour—or not. In fact, having multiple credit products can be detrimental even if you don’t use them all. The margin of error for paying bills late or losing track of how much you spend widens, and the ratio of credit available to credit use widens—a factor that influences your credit score by as much as 30 per cent.
But it’s not all doom and gloom. While life can sometimes complicate matters, Jara says that keeping your score as perfect as can be is fairly simple: “Pay your credit card bill as fast and as much as possible,” she says. “It’s not free money.”
“There is no quick fix,” says Jara. “Rebuilding takes time and patience.” But even if your credit score has dipped below that coveted 750-850 rating, the good news is that it’s possible. And then, Jara says, “All the doors are open for you.”