Tag: credit scores

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CREDIT SCORE RATING: YOU HAVE A GREAT ONE BUT YOU WERE STILL REJECTED

credit score rating, credit score, credit scores, debt, credit, debt service ratio, small business loan, personal bankruptcy, bankruptcy, bankruptcy alternatives, starting over starting now

Credit score rating is an important part of what lenders look at when you apply for a loan, but it is not the only thing. We all know that credit score rating is used to determine your credit worthiness, but what you may not know is that your credit score rating is not the only factor used. Even with a great credit score rating, you may still be rejected when applying for credit. How is this possible?

In order to have a good credit score rating you must be able to show that you have the means to repay credit. However, your ability to repay credit may change depending on your income and your debt load. Using mathematical formulas, something called a debt service ratio (DSR) is calculated. Your DSR shows what percentage of your monthly income goes toward paying off debt. You may be managing your debt today, but if your DSR shows that with additional credit responsibilities you may have trouble meeting or managing your existing expenses, your credit application may be rejected. The same applies to an entrepreneur who’s looking to finance his/her small business with a small business loan. The credit worthiness of the individual has to be taken into account, as that’s who the lender is really loaning the money to, either directly or by way of a personal guarantee.

If you offer collateral as security in exchange for credit, the value of your collateral must be established. An asset that you think has great value may not be worth what you think it is in the eyes of the lender. Typically real estate and guaranteed investments are better forms of collateral than your jewelry, car, machinery or equipment.

Unfortunately many people are carrying too much debt but are fearful of the bankruptcy process, so they attempt to borrow more money in order to either consolidate their loans or for a specific need. Adding more debt is not the answer. Personal bankruptcy is an option, but not one to be feared. And, there are bankruptcy alternatives to be considered as well. Don’t run away from debt. Contact the Ira Smith team. We can help you deal with debt and Starting Over, Starting Now you can be well on your way to a debt free life

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Brandon Blog Post

SECURED CREDIT CARD

credit score, bad credit, credit history, financial history, licensed trustee, avoid bankruptcy, bankruptcy alternatives, debt consolidation, credit counselling, consumer proposals, starting over starting now, credit scores, financial health, line of credit, rebuilding creditA secured credit card functions in the same manner as a regular credit card. The only exception being that the card is secured by the amount of deposited funds that remain safeguarded in the institution where the individual acquires the card. The card looks like a regular credit card and acts like a traditional credit card. Purchases are limited by the amount of funds backing the card. The majority of institutions require a minimum secure balance of $500. However, individuals or businesses may deposit more if desired.

Who Uses a Secured Credit Card?

The card might be used by anyone with a past or current history of bad credit. When first starting out, many young people or students have no line of credit. The card might serve as a means of establishing a credit history. Someone recently moving to Canada, having recently undergone bankruptcy or having difficulty obtaining a conventional credit card may also look into acquiring a secured card.

Newlyweds starting a life together often look for ways of establishing credit. Anyone having endured a divorce or the death of a spouse may also need to start over and rebuilding credit. Entrepreneurs having difficulty getting financial backing or searching for a means of creating a financial history might also be interested in securing a card.

Benefits of a Secured Credit Card

Getting approved for a secured card is practically guaranteed. Having a card eliminates the need to withdraw and carry cash. However, in case someone needs cash for an emergency, the card enables users to get cash advances. Numerous other conveniences of having a credit card include using the card for making reservations, purchases or services rendered.

A secured credit card offers an ideal way to establish or improve credit scores, which are typically required when needing to apply for loans. By making monthly payments for goods or services, in the same way that one would if having a traditional credit card, you can learn how to create and stick to a budget.

Many secured credit cards don’t carry the same fees that are required by traditional cards so using them is not only convenient but less expensive.

Ensuring Good Credit

After applying for and acquiring the credit card, maintaining good credit means:

i. Paying off the balance monthly

ii. Paying more than the minimal monthly amount required

iii. Making payments on time

Get a Secured Credit Card Today

Regardless of your current financial situation we can help. To find out more about secured credit cards, and even to apply for a secured credit card, click on this link for the application form. If you are experiencing financial problems, contact Ira Smith Trustee & Receiver Inc. We are a licensed trustee and will listen to your issues and provide compassionate, professional assistance to assist you to avoid bankruptcy.

We will explore alternatives to bankruptcy, such as debt consolidation, credit counselling and consumer proposals. Starting Over, Starting Now, we will assist you to regain your financial health.

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Brandon Blog Post

A GREAT CREDIT SCORE DOESN’T MEAN YOU WILL GET THAT LOAN

A GREAT CREDIT SCORE DOESN’T MEAN YOU WILL GET THAT LOANCredit score. If you’re not concerned about your credit score, you should be. Our lives revolve around our ability to access credit – car loans or leases, co-signing a loan for others, mortgages, rental agreements, lines of credit, credit card. In addition to affecting our ability to borrow, credit scores can impact our insurance rates and even our love lives.

What is a Credit Score? According to TransUnion, one of Canada’s largest credit reporting agencies, “A credit score is a statistically derived prediction of an individual’s credit risk at a particular point in time. Credit risk is typically defined as the likelihood of an individual becoming seriously delinquent (i.e. 3 payments past due or worse) within a 12-24 month period in the future). The score is a three-digit number that lenders use to help them make decisions. A higher score indicates that the individual is a better credit risk to a lender”.

I have always advocated to clients that having a good credit score is more of a risk/reward indicator for lenders as opposed to a true measure of “credit responsibility”. Credit scores don’t really evaluate credit worthiness, but instead whether a company can make a profit from the person. The good credit score they are looking for is in a range where you don’t pay things on time, but you eventually pay. That way they can charge interest, but feel comfortable that ultimately you will pay them in full. If you pay all your bills off in full and on time every month your credit score may indicate to the credit card issuer or lender that they may not be able to earn enough profit from you and therefore your credit score may not be as good as someone who carries a balance and pays the minimum every month. Although it may sound counterintuitive, having a great credit score doesn’t necessarily mean you’ll get that loan. However, it goes without saying that if you have a very poor credit score, then with certainty we can say that you will not obtain the approval of your banker. Unfortunately, there is not an online tool such as a Canadian credit score calculator.

If you’re having credit problems, it may be indicative of serious debt issues. Contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now we can help you deal with your debt issues and restore you to financial health.

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Brandon Blog Post

THE 10 MOST COMMON CREDIT SCORE MISTAKES

canadian credit score calculator, credit score, credit scores, credit score mistakes, credit report, credit problems, credit history, bad credit, bankruptcy and insolvency act, bankruptcy alternatives, bankruptcy, consumer proposals, credit counselling, toronto bankruptcy, vaughan bankruptcy, trustee, woodbridge bankruptcy, what is bankruptcy, what is a consumer proposal, dave johnsonLast week we discussed how Your Credit Score Can Be Ruined Even If You Don’t Do Anything Wrong. This week we’ll be addressing The 10 Most Common Credit Score Mistakes.

What is a Credit Score? According to the Office of Consumer Affairs (OCA) “Your credit score is a judgment about your financial health, at a specific time. It indicates the risk you represent for lenders, compared with other consumers. Unfortunately, there is not an online Canadian credit score calculator tool.

There are many ways to work out credit scores. The credit reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay”.

What are the 10 Most Common Credit Score Mistakes?

1. Failing to check your credit report for errors: As we discussed in last week’s blog Your Credit Score Can Be Ruined Even If You Don’t Do Anything Wrong. Check your credit report at least annually. Mistakes on credit reports are more common than you may have imagined and you need to stay on top of the situation. If you do discover any errors, contact the credit bureau as soon as possible to correct the situation.

2. Not using your full legal name in financial documents: It’s possible that people with common names or similar sounding names could have their name attributed to a credit report that is not theirs, as was the case for Mr. Dave Johnson of Pembroke, Ontario. Use your full legal name on bank accounts, credit applications and other documents that become part of your credit history.

3. Paying your bills late and failing to make at least the minimum monthly payment: If you don’t pay at least the minimum amount due on time your creditors will eventually report your account as past due, which can damage your credit score. If there is a reason why you won’t be able to pay your bill on time, contact your creditor before your bill is due to work out an arrangement if possible.

4. Maxing out on your credit cards: If your credit cards are maxed out, potential creditors may question your ability to repay. If you are approved for a loan you may be charged a higher interest rate to compensate for what is viewed as a higher risk.

5. Not alerting creditors if you’ve moved: Your bill may arrive late and as a result your payments could be late, potentially damaging your credit score.

6. Registering for too many new credit cards: Consumers who often open new credit cards are viewed as a greater risk than those who don’t.

7. Closing older credit card accounts: Closing older credit card accounts shortens the length of your credit history and this can adversely affect your credit score.

8. Don’t co-sign for someone else’s loan: You could be liable for that person’s debt and damage your credit rating.

9. Don’t share your credit card or social insurance number with anyone: There are a lot of scams abound where people try by phone, email or mail to get your credit card or social insurance number. This can be a fast track to identity theft and financial disaster.

10. Ignoring the warning signs of credit problems: If you have trouble making the minimum payments on time and have maxed out all of your credit, you have serious debt problems.

Serious debt problems need professional help. Contact Ira Smith Trustee & Receiver Inc. and take the first step towards a healthy financial future. Starting Over, Starting Now a debt free life can be yours.

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Brandon Blog Post

HELP FOR SENIORS IN DEBT-SENIORS IN DEBT, PART 2

help for seniors in debt, seniors in debt, debt, debt management, bankruptcy, trustee, trustee in bankruptcy, sandwich generation, grey divorce, seniors with credit card debt

Last week we discussed “What Do The Golden Years Really Look Like”?This week we’ll be addressing why the majority of seniors are in debt and provide help for seniors in debt.

Seniors are facing a myriad of financial issues that have made their anticipated “golden years” anything but golden.

  • The Sandwich Generation: Many are still part of the “sandwich generation” a phenomena caused by delayed marriage, postponement of children, and adults with increasingly long-lived parents. They’re borrowing to help their children, grandchildren and parents. As long as they have collateral and a good credit rating, banks will readily lend them money.
  • Grey Divorce: According to Statistics Canada, divorce among couples 65 years of age and older is becoming more common and grey divorce can create serious debt for boomer retirees.
  • Recession: Battered financial markets and anaemic economic growth have forced Canadians to make debt management and not retirement the primary focus of financial planning. Their investment returns may have been decimated by the recession and they borrowed hoping markets would stabilize.
  • Lifestyle Choices: Even though they’ve reached 65 and their incomes have been greatly reduced, they continue to live the same lifestyle that they lived prior to retirement. With reduced incomes, often coupled with increased expenses, they are accumulating more debt to boost income through credit so that they can continue to enjoy a pre-retirement lifestyle they may no longer be able to afford. Seniors with credit card debt adapt by making only the minimum monthly payments on credit cards, which leads to a downward debt spiral, a journey that often ends with a trip to a trustee in bankruptcy.

The problem with carrying debt into retirement is that it must be serviced with less income than when working full-time. Mid-career people can start over, but retirees can‘t. If you are now facing serious debt issues contact Ira Smith Trustee & Receiver Inc. We can help you get your life get back on track. Starting Over, Starting Now you can take the first step towards an enjoyable retirement. Watch for our next blog when we’ll be discussing if seniors should try and pay off the debt or declare bankruptcy.

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Brandon Blog Post

THE RELATIONSHIP BETWEEN YOUR CREDIT SCORE AND INSURANCE RATES

Last week we took a light hearted look at how people are using credit scores to find love. This week we are discussing a more serious matter -the relationship between your credit score and insurance rates. Sadly many consumers have seen their premiums rise as a result. CBC-TV’s “Marketplace” spoke with several people who saw home insurance premiums double after their insurance company began including credit scores as a way to calibrate risk. How prevalent a practice is this? About 55% of Canada’s largest insurers now use credit scoring. And of that segment 42% did not disclose the practice to customers, according to the Canadian Council of Insurance Regulators.

The insurance companies who use credit scoring are trying to put a positive spin on it. According to Desjardins, insurance companies check your credit score only to offer you the best premium possible. The Cooperators offers a slightly different slant. “Credit score is simply a reflection of a person’s level of responsibility and behaviour when it comes to managing their financial obligations.” Donald Hanson of the National Association of Independent Insurers stated, “Research indicates that people who manage their personal finances responsibly tend to manage other important aspects of their life with that same level of responsibility and that would include being responsible behind the wheel of their car or being responsible in maintaining their home.” Cheap down payment auto insurance companies have found that there is a correlation between higher scores and safe driving but I have not seen the research to back up this claim.

Many disagree with the use of insurance credit scoring citing that a driver’s record doesn’t change with his/her credit score, nor does the area where their house is located. Therefore, there is no evidence that the risk factor will change with a high or low credit score. In fact credit scoring has been a controversial topic in Ontario as it is in other parts of the country. The practice is no longer allowed in some provinces, and some groups, including The Insurance Brokers Association of Ontario (IBAO) have been lobbying for several years to have it banned in Ontario. Whether you agree or disagree, the fact that insurance credit scoring exists only goes to show how important it is for all of us to maintain good financial health. Unfortunately, there is not a Canadian credit score calculator tool that anyone can use.

If your credit score is adversely affecting your life, contact Ira Smith Trustee & Receiver. Starting Over, Starting Now you can take the first steps towards financial health.

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Brandon Blog Post

GOOD CREDIT SCORES HAVE SEX APPEAL

credit score, credit scores, online dating, credit score dating, credit counselors, credit historiesWhat do you mean by good credit scores have sex appeal? We all know that if you want to borrow money, buy a house, purchase or lease a car…… you need a good credit score. But, did you know that now you may need a good credit score to find love? We live in the age of online dating and there are niche market online dating sites for just about everything – religion, age, weight, location, hobbies….. Now there are actually websites called CreditScoreDating.com and DateMyCreditScore.com for those who believe that a good credit score is a prerequisite for a good date. This is not a strange, “out there” anomaly; credit counselors report that many of their clients come to them because their romantic partners refuse to get married before they eliminate their debt. And, according to the New York Times, more people are adding credit scores to their social filters. People with poor credit histories, low scores, or no scores might be starting to find it more difficult to find long-lasting love.

In the 60s potential dates wanted to know your astrological sign. Now they’re asking for your credit score. Is this progress? Will the matchmakers of the future be financial planners and accountants? Do you think that credit scores should play a significant role in choosing a mate?

Contact Ira Smith Trustee & Receiver Inc. We’re not matchmakers, but if you have serious debt issues and a poor credit score, we can help. Starting Over, Starting Now you can live a debt free life and perhaps find love.

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Brandon Blog Post

SHOULD SOCIAL MEDIA BE USED TO DETERMINE YOUR CREDIT SCORE?

bad credit, Bankruptcy, bankruptcy alternatives, Bankruptcy and Insolvency Act, bankruptcy in Canada, bankruptcy in ontario, bankruptcy ontario, bankruptcy protection, bankruptcy trustees, Consumer Proposal, consumer proposals, credit report, credit score, credit scores, debt management, debt settlement, declaring bankruptcy, Facebook and LinkedIn, social media, social networks, what is a consumer proposalAre you experiencing problems with debt management or having trouble getting credit due to a bankruptcy or a consumer proposal? If so, you are going to be delighted to hear that there are companies who believe that online reputations can tell lenders more about a person’s trustworthiness than the traditional credit score. Your credit score is established on the basis of how you pay your bills while companies like Lenddo and Neo Finance are analyzing data from social networks like Twitter, Facebook and LinkedIn, and other factors to reach people who have a hard time getting loans. The Lenddo score is based upon:

  • Number of followers
  • Background of peers
  • Education and employers
  • Repayment history of friends

The Neo Finance score is based upon the following information in a person’s LinkedIn profile:

  • How long the user has held jobs
  • The number and quality of connections in their industry
  • The seniority of their connections

Should social media be used to determine your credit score? Probably not. Basing anything on the number of social media followers is categorically unreliable. Social media networks have become a numbers game where there is the mistaken belief that “whoever has the most, wins”. Fake Twitter followers have become a multi-million dollar business. Open networkers on LinkedIn have thousands of followers that they don’t know and the same goes for people who collect Facebook friends. The other problem is that the consumer would have to be willing to connect the financial service to their social media networks’ data which of course brings up privacy issues. Although in theory, this sounds like an interesting idea, I’m afraid that there is no quick fix for bad credit.

If you are experiencing problems with debt management or having trouble getting credit due to a bankruptcy or a consumer proposal, contact Ira Smith Trustee & Receiver Inc. for information on how to fix bad credit so that you can live a debt free life Starting Over, Starting Now.

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Brandon Blog Post

Everything You Wanted to Know About Credit Scores But Were Afraid to Ask

everything you wanted to know about credit scores but were afraid to ask, credit, credit scores, credit score, credit report, credit reporting agencies, problems with credit, toronto, bankruptcy, vaughan bankruptcy
everything you wanted to know about credit scores but were afraid to ask

Everything you wanted to know about credit scores but were afraid to ask: Introduction

Credit may not be sexy but it does make the world go ‘round. That is why it is important for you to know everything you wanted to know about credit scores but were afraid to ask.

Everything you wanted to know about credit scores but were afraid to ask: Our lives revolve around credit

Our lives revolve around credit – mortgages, car loans, student loans, credit cards…. Take out your wallet and look inside; how many credit cards do you have? According to a poll conducted on behalf of Credit Canada:

  • 43% of Canadians have more than 3 credit cards
  • 80% of Canadians do not know their credit score
  • 63% of Canadians do not know how their credit score is determined

The more you understand about credit the less likely you are to get yourself into trouble.

Everything you wanted to know about credit scores but were afraid to ask: What is a credit score?

A credit score indicates the risk you represent to lenders compared to other consumers. In Canada we have two credit reporting agencies – Equifax and TransUnion. They use a scale from 300 – 900 to rate your credit score. The number is calculated using a mathematical formula based on the information in your credit report (has detailed information on a person’s credit history including identifying information, credit accounts and loans, bankruptcies and late payments, and recent credit inquiries). You get points if lenders believe that you use credit responsibly. Conversely you lose points if you manage credit poorly. The higher your number is the better. A high number means that you are a good risk for credit. There are many factors that figure your credit score:

  • Length of time you’ve had credit
  • The types of credit that you use
  • Do you pay your bills on time?
  • How much debt are your carrying?
  • How many people have inquired about your credit?
  • Have you been bankrupt before?

Everything you wanted to know about credit scores but were afraid to ask: Why is my credit score important?

At some point in your life you will want access to credit whether it’s for a credit card or to borrow money to buy a house or a car, or to start a business. If you have a high credit score, you may be able to get a lower interest rate on loans, which can save you a lot of money over time. A good credit score will allow you to meet your goals for the future.

If you’re experiencing problems with credit, contact Ira Smith Trustee & Receiver Inc. We can help you get your life back on track Starting Over, Starting Now.

Call a Trustee Now!