{"id":3206,"date":"2013-04-04T10:11:06","date_gmt":"2013-04-04T15:11:06","guid":{"rendered":"http:\/\/www.cusjc.ca\/ottawainsight\/?p=3206"},"modified":"2017-11-19T20:11:14","modified_gmt":"2017-11-20T01:11:14","slug":"making-up-for-maxing-out-rebuilding-credit","status":"publish","type":"post","link":"http:\/\/www.cusjc.ca\/ottawainsight\/?p=3206","title":{"rendered":"Making up for maxing out: rebuilding credit"},"content":{"rendered":"

Sitting alone in my car, stuck in a snow bank on the side of the highway, I realized it may be time to get a credit card.<\/strong><\/p>\n

I\u2019d been without one for nearly two years, but now I needed a tow truck and didn\u2019t know whether they\u2019d take debit or the cash I had on hand.<\/p>\n

Luckily, freeing my car was a fairly easy fix. Getting a credit card, however, has been a whole other story.<\/p>\n

Like many Canadians, I got my first credit card when I was 18. For years I was dutiful about paying off my balance as soon as I got the bill.<\/p>\n

And then, well, I wasn\u2019t.<\/p>\n

That, according to credit experts, was a big mistake.<\/p>\n

\u201cYou cannot have a bad credit rating if you pay all your bills on time,\u201d explains Ian Lee, a professor with Carleton University\u2019s Sprott School of Business.<\/p>\n

EARNING YOUR RATING<\/strong><\/p>\n

Lee, who spent 10 years working in banking before making the leap to academia, says credit ratings are earned, not given out arbitrarily.<\/p>\n

\u201cPeople acquire a poor credit rating because of \u2013 let me be very blunt \u2013 because of bad behaviour on the part of the consumer,\u201d he says.<\/p>\n

To rebuild a bad credit rating, a consumer has to start paying his bills on time \u2013 all of the time.<\/p>\n

\u201cI think young people sometimes have problems with credit \u2026 because they have a more casual attitude towards it and they don\u2019t realize that in the business world, no one appreciates casual attitudes towards things like credit,\u201d Lee says.<\/p>\n

While I\u2019ve paid off my credit card debt, the scars of my poor decisions left a mark on my credit rating \u2013 and an empty slot in my wallet.<\/p>\n

PLASTIC PAYMENTS<\/strong><\/p>\n

It seems I\u2019m not alone. Putting purchases on plastic has become the norm in Canada.<\/p>\n

TransUnion looks at Canadian\u2019s average credit card debt each quarter, and found in the fourth quarter of 2012 that the average consumer owed $27,485, not including mortgages.<\/p>\n

But how is that debt affecting personal credit ratings? Canadians can check their personal credit report by ordering it for free online<\/a>. The report is a summary of credit history, listing everything from when an account was opened to whether payments have been made on time.<\/p>\n

Julie Hauser, spokeswoman for the Financial Consumer Agency of Canada, suggests people check their credit reports from both Equifax Canada and TransUnion Canada once a year.<\/p>\n

\u201cThe whole tracking of personal finance is so important, especially for students,\u201d she says. \u201cYou want to make sure it\u2019s accurate.\u201d<\/p>\n

Employers and landlords may check credit reports, and a good credit rating helps negotiate better rates for future loans, Hauser adds.<\/p>\n

INTEREST COSTS AND CREDIT RATINGS<\/strong><\/p>\n

Meanwhile, a bad credit rating can mean higher interest rates and credit cards with fewer perks.<\/p>\n

Bad credit also takes time to rebuild. And time means more than just a few months, says Lee.<\/p>\n

\u201cThree months doesn\u2019t show a real trend. It just shows three months of payment on time,\u201d he explains. \u201cIf you have a bad credit rating, it takes probably two years or more.\u201d<\/p>\n

There are options out there for people struggling to convince lenders to give them a chance, however, such as having someone with better credit co-sign for a card.<\/p>\n

A secured credit card is also an option, says Hauser.<\/p>\n

To get a secured credit card, you must put down a deposit with the credit provider, which acts as insurance if you don\u2019t make your payments.<\/p>\n

\u201cOnce you\u2019ve shown that you pay your balance regularly, you can ask for the deposit back,\u201d Hauser explains.<\/p>\n

Soon I\u2019ll have a new credit card in my wallet, and I\u2019ll be following Hauser and Lee\u2019s advice and making sure that I\u2019m a responsible credit user so that it stays there.<\/p>\n

\u201cThe best way to show you\u2019re responsible,\u201d Hauser says, \u201cis to make your payments on time.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Sitting alone in my car, stuck in a snow bank on the side of the highway, I realized it may<\/p>\n","protected":false},"author":65,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[44],"tags":[86,84,87,82,68,83,85],"class_list":["post-3206","post","type-post","status-publish","format-standard","hentry","category-personal-finanice-2013","tag-bad-credit","tag-credit-cards","tag-credit-rating","tag-financial-consumer-agency-of-canada","tag-gemma-karstens-smith","tag-ian-lee","tag-transunion"],"_links":{"self":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/3206","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/users\/65"}],"replies":[{"embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3206"}],"version-history":[{"count":9,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/3206\/revisions"}],"predecessor-version":[{"id":4506,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/3206\/revisions\/4506"}],"wp:attachment":[{"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3206"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}