Establish Your Financial Independence

Please, please, ensure that you establish your own credit. There are certainly times when credit is required jointly, such as a mortgage, but everyone needs to establish their own credit history. You should avoid having everything joint or in one name. In the event of an unfortunate situation, including separation, accident, or death, it is vital that each individual be able to step in when credit is required. This could be as simple as establishing a utility account in your own name without having to pay a deposit for having little or no credit history!

A number of factors will come into play when trying to establish credit, such as current employment and income but, regardless, even if it is minimal, consider establishing yourself in the eyes of the credit reporting agencies. Did you know that no credit can be worse than bad credit? As you establish credit, be sure to protect it by keeping accounts in good standing. Talk to your financial advisor for more guidance.

Feel free to share your experience with credit and the need to have your own history!

While this is one of my tips in 10 Tips for Women about Money, this applies to everyone who reaches the age of majority (18 in Alberta).

**This message is an expression of the author’s personal opinions. The companies represented by Antony (Tony) Ratcliffe of Ratcliffe Wealth & Risk Management, as an independent agent/broker, will not be held liable in any way for the opinions expressed herein.

Building Strong Credit for a Strong Future

As you already know, your ability to borrow for investment needs and other purchases is impacted directly by your credit score. You may have learned before that your credit score severely impacted which doors were open to you in life. Or, you may have found a few promising doors, only to find them slammed in your face. Whether you are more like the first scenario or the second, a strong credit score is necessary to your financial future. There are many ways to revitalize this number and make it work for you. These tips may help you begin strengthening your credit:

1. Simply opening a chequing and a savings account at a financial institution can have a positive impact. While this will not be directly reported in your credit score, it is a factor that can be considered by lenders as you present yourself as a responsible and trustworthy individual. This is a great way to develop a relationship with the financial institution from which you may later request a loan.

2. Credit cards can be dangerous territory if they are not handled properly, but if handled well they can portray your spending habits and your trustworthiness. If you are concerned about getting in trouble, use the card for one or two small purchases every month and ensure you have the funds set aside to pay the statement as soon as it is received. This says, “Not only can I borrow money, but I will pay it back in full.” This increases your overall appeal to credit lenders as well as increases your credit score.

3. Limit the amount of cards in your wallet. Too many cards are tempting, and each time a new account is opened it can lower your credit score.

4. Pay your utility bills on time. Late payments may be reflected in your credit score. This will also prevent late payment charges. Late fees are lost money and reputation crunchers.

5. Avoid impulse spending and cash advances, especially for frequent small purchases.

6. Use a register to keep track of expenses and stay within your financial means.

7. Establish a cell phone number under your name. This is often a contract for 2 or 3 years. Making your regular payments shows that you are committed to your financial responsibilities and can be trusted with a long term contract.

8. If you have any current loans, like student loans, try to make it your mission to pay them off. The amount you owe creditors is reflected on a monthly basis to credit bureaus. The more that number decreases, the better.

9. Check your credit report regularly. Despite rumours, it does not lower your score to check your report. Make sure there are no errors on the report, and if there are, correspond with the credit bureau in writing with proof of the inaccurate information.

10. Your credit score takes time to develop. Allow your on-time payments and contracts to work their magic. Patience is key. Do not go and open other accounts trying to boost your score.

11. Be careful opening store accounts. Many consumers enjoy the special offers and then lose money due to finance and late charges. While the offers are tempting, you owe it to your future and your credit score to stay within your means.

With these simple tips, you can easily develop and secure a successful credit score, credit history and a stellar reputation with credit lenders. Good credit is essentially VIP access to lower payments on homes, cars, loans, and practically any other investments you pursue.