Tag: credit risk

Categories
Brandon Blog Post

CREDIT CARD MINIMUM PAYMENT AMOUNT: ARE YOU BEING FOOLED BY ONLY MAKING THE CREDIT CARD MINIMUM PAYMENT

credit card payment amount 1
credit card minimum payment amount

Credit card minimum payment amount: Introduction

Do you believe that because you make the credit card minimum payment amount on time every month that you’re doing well? Do you think this would let you be considered a good credit risk? If that’s the case, you would be wrong. Making only the minimum payments on your credit cards is a sign that you’re living in a financial danger zone. And the likelihood is that if you continue along this path, you’ll accumulate more debt. You will not get out of debt.

Credit card minimum payment amount: What the TransUnion survey says

TransUnion, one of Canada’s largest reporting agencies, did a recent survey. It showed that making just the credit card minimum payment amount is leading more consumers into delinquency. This is the same result with other loans too.

They’ve also created a “Total Payment Ratio” metric that shows the correlation between the payment amount and the delinquency across multiple products. To calculate the TPR a consumer’s total monthly credit payments are divided by the total minimum due on all the consumer’s credit products. The higher the TPR, the less likely a consumer falls behind on payments. Using the TPR to find the risk of delinquency, the TransUnion study showed:

  • Canadians with a TPR of less than five on their credit cards had a 1.77% high risk of auto loan delinquency — defined as not making a payment for 90 days or more
  • Once the TPR rose to more than 15.0, the high risk of delinquency dropped to 1.4%

Credit card minimum payment amount: It is not a good sign of your credit worthiness

As you can see, just making the credit card minimum payment amount is not a good sign of your credit worthiness. Conversely, making more than the minimum monthly payments will make you more attractive to financial institutions. This is because consumers that make more than the minimum monthly payments tend to have more liquidity and will be less likely to miss payments.

Credit card minimum payment amount: You need help to get out of debt

If you’re making only the credit card minimum payment amount, you haven’t got a hope to ever get out of debt. The interest rates are around 20% (and sometimes more). Your minimum monthly payments are paying the interest, not the debt. Now is the time to call in the professionals! Contact a professional trustee. The Ira Smith Team can help you conquer debt and get back on track to living a financially healthy life Starting Over, Starting Now. All it takes is one phone call.

3bestaward

Categories
Brandon Blog Post

CO-SIGN CREDIT CARD MEANING: CO-SIGNING ON A CREDIT CARD CAN BE RISKY BUSINESS

imageCo-sign credit card meaning: Introduction

Co-signing on a credit card for a family member or a friend may seem like the right thing to do. However, do you really understand what you’re getting into? Too many people do not fully understand the co-sign credit card meaning. This is risky business that can cost you a lot more than you bargained for.

Co-sign credit card meaning: What does co-signing on a credit card involve?

The co-sign credit card meaning is that when you co-sign on a credit card it’s the same as getting a credit card yourself. You are 100% responsible for the debt. It doesn’t matter that none of the charges are yours and that you are not the primary card holder. The minute you co-signed on the credit card, you guaranteed repayment. If the person you co-signed for doesn’t make a payment for any reason, you’re on the hook for the money – all of it.

Co-sign credit card meaning: Why are you being asked to co-sign?

If you’re being asked to co-sign on a credit card it’s typically for one of three reasons:

  1. The person asking you to co-sign has a poor credit history and is deemed too great a risk by the credit card company. This should give you cause to pause.
  2. The person is very young and has no credit history (and not earning enough money to be considered a good credit risk). This should also give you cause to pause.
  3. You are co signing for your child for a credit card with a very low limit as part teaching your child to use credit wisely and to help them get a good credit score. This includes the parent willing to cosign for a credit card for a child under the age of 18.

The only one of these three possibilities that we actually think is good is number 3; a parent willing to co sign a credit card with a very limited credit limit while monitoring their child’s use as part of giving a financial education.

Rather than co-signing, you may wish to consider helping your friend or relative get a secured credit card. Put up a modest deposit for them. At least this way you limit your potential exposure.

3bestaward

Co-sign credit card meaning: How can co-signing on a credit card negatively impact you?

As we’ve already mentioned, you will be on the hook for the money if the primary card holder doesn’t pay. However, there are several other ways in which you can be negatively affected.

  1. If there are any late payments on the account for which you co-signed, that can also negatively impact your credit score.
  2. The credit card company can increase the amount of available credit on the card without with the co-signer’s permission (if the borrower is over the age of 21). You could be on the hook for a lot more money that you anticipated.
  3. Co-signed debt Is part of the calculations that decide whether you’ll get approved for any kind of borrowing, including a mortgage.

Co-sign credit card meaning: What to do if you have debt problems

Co-signing on a credit card can be risky business and land you in financial hot water. Are you experiencing financial distress as a result of co-signing on a credit card or otherwise?

If you’re struggling with debt for any reason Ira Smith Trustee & Receiver Inc. can help. We’re experts in dealing with debt. Give us a call today and take the first step towards conquering debt Starting Over, Starting Now.

 

Categories
Brandon Blog Post

EMPLOYMENT CREDIT CHECK IS LIKE A SCHOOL BULLY

credit, credit check, credit score, credit risk, credit report, credit rating, employment credit check, starting over starting now, trusteeCan the employment credit check beat you up? We previously discussed whether bad credit could hurt your job search. Now we know that an employment credit check certainly can. Even though a credit score was designed to predict whether or not you’re a good credit risk when you apply for a loan, a credit card, mortgage, a car lease, etc., more often than not you now have to submit to an employment credit check when applying for a job. But, should a potential employer be allowed to check your credit score and not offer you a job if you have a low one?

It sounds punitive, doesn’t it? After all, how can anyone improve their credit score without a good paying job? “There’s a certain irony that the people who are most vulnerable and who most require access to jobs could be discriminated against because they have poor credit ratings,” said Murray Rowe Jr., president of Forrest Green, a Richmond Hill-based credit advisory group.

Several states in the U.S. agree. California, Connecticut, Hawaii, Illinois, Oregon, Vermont, and Washington have enacted measures limiting the use of credit reports and the employment credit check when determining whether a person is the right fit for a job. New York City recently announced that lawmakers are expected to pass a bill prohibiting employers from reviewing the credit histories of prospective workers. And, according to a New York-based think tank, the application of credit reports has moved far beyond their intended purpose.

The federal government of Canada doesn’t agree. In fact it recently introduced mandatory credit checks as part of a new security screening procedure for public servants. Two unions representing federal employees object to the employment credit check policy and call it an unnecessary invasion of privacy.

Regardless of where you stand on the issue of employment credit check, the one thing that we can all agree on is that serious financial issues can jeopardize more than your bank account. It’s very important to deal with your financial problems as soon as possible with the help of a professional trustee and to not let them bully you. Contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now you can live a debt free life and have the confidence to apply for the job of your dreams.

Call a Trustee Now!