Credit and Your Credit Rating

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					Credit and Your Credit
     Investment and Finance 12
            Ms. Stewart
 How much Do Canadians Know?
  A recent credit report survey of Canadians
    24% knew their personal credit rating
    15% had requested a credit report for
    50% did not know what factors
     contribute to a credit rating.
            What is a Credit Rating?
   Unless you do all your business in cash, you probably have a credit
    rating. It contains a number and a letter.

   The number – between 0 and 9 – shows how fast you pay your
    bills. “1” means you pay your bills quickly, while “9” means you
    never pay them.

   The letter tells lenders the type of credit you use:

   “R” stands for revolving, and is the most common. If you have a
    credit card, you will have an “R” credit rating.
     “I” stands for installment. This means you borrow money once, then
    make regular payments. Leasing that sports car will give you an “I”
    “O” means open, like a line of credit. Here the money you borrow is
    due at the end of a set period.
         What is a credit rating?
   Unlike the movies, an “R” rating isn’t bad!
    If you pay your credit card bills in full every
    month, you’ll rate an “R1.” That’s as good
    as it gets. But if you skip town without
    paying, or declare bankruptcy, you’ll be at
    the bottom of the chart – “R9.”
      What is a credit score?
 While your credit rating looks at your credit
  history, your credit score measures your
  financial health at a set point in time.
 Credit agencies use a number of different
  factors to arrive at your credit score.
    Factors that Make up Your Score
 Your payment history
 If you’ve ever declared bankruptcy
 How much money you owe
 How long you have had credit
 The type of credit you use
 If you’re trying to get more credit (ex.
  There have been recent requests for your
  credit report)
      What Score Do I Need?
 Your credit score will be between 300 and
  900. The higher your score, the more likely
  you are to get a loan. A higher credit score
  can also help get you a lower interest rate.
  But there’s no guarantee.
 You may need a credit score of 750 to
  lease that sports car, but your landlord
  may be fine with 650. It’s up to each
  lender to decide.
    Building a Good Credit Rating
   Here are some simple things you can do to build
    or improve your credit score:
    1) Pay your bills on time and in full (at least
    pay the minimum payment).

    2) Don’t go over the limit of your credit card
    (Keep your balance low – below 35% of your
    credit limit if you can. The higher your balance,
    the more it affects your credit score).
Building a Good Credit Rating
3) Don’t apply for credit too often. Too
many lenders asking about your credit in a
short period of time can lower your credit

4) Pay off your debts as quickly as
 Building a Good Credit Rating
5) Build a strong credit history. You may
  have a low score simply because you
  don’t have a long record of borrowing
  money and paying it back. You can
  improve your score by using a credit card
  – wisely.
       Clip Time!

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