Phooey to New Year resolutions. My vote for the best time to become a better (slimmer) person while working for world peace is the fall with its energizing cooler months.
But before you take on the world and its problems or even your own BMI (body mass index), focus on an issue of financial health first — your credit score. It is as important to your financial life as your weight is to your physical well-being.
There are actually two parts to a credit rating. The first is your score.
The bottom line is this: a FICO score of more than 650 means you will likely qualify for most standard loans including a mortgage, line of credit and car loan. Less than that will probably send you into the arms of higher interest rate lenders. Aim for a score of 700 to give you some leeway.
The second part of your credit rating is your profile — debts, available credit, late payments, closed accounts and other details of your financial life.
It is very important to check your score and profile annually, so make a resolution this very minute to do it before the leaves turn to red and gold.
There are a lot of myths associated with credit scores. Here are three:
1. Checking my score negatively affects my credit rating.
Nope. Your own inquiry is called a soft-check and doesn’t change anything.
2. Closing old accounts or credit cards will improve my score.
No again. Simplify your financial life by all means, but you are usually better off closing newer accounts or cancelling newer cards.
Retaining recently opened cards and accounts may make it appear you have a short history and a lengthy (good) history is what boosts your score.
3. As long as I pay all bills and make minimum payments on credit cards my score will be high.
And another no. A key component of your score is available credit.
Try to use not more than 50 per cent of your credit card or line of credit limits. Better yet, pay off your balance every month.
You can access an abbreviated credit report free from equifax.ca or transunion.ca. A full report plus your score will cost just under $25.