A good credit score can help you in a lot of ways. In the purview of the pandemic, we’ve learned how contingent our times are and that we need to be prepared for this contingency.
A good credit record lets you borrow money at a relatively lower interest rate, be it for a personal loan or mortgage.
It also improves the chances of you getting better credit care. However, some common mistakes can tank your credit score and be disastrous for your credit record.
Credit Report Negligence
Not giving enough attention to credit reports can be particularly harmful because there may be mistakes and errors, be they minor or major. Minor errors can be overlooked to an extent, but it is never a good idea to do so.
Minor errors include incorrect personal information or misspelled addresses or names. Major errors are disastrous because they can potentially lower your creditworthiness. Major errors can include incorrect payment history or accounts in your credit report that don’t belong to you.
It’s probably a good idea to check your credit report at least once a year to check If there are any mistakes.
When reviewing them, you should pay attention to whether your credit reports have any account numbers that don’t belong to you or that it’s wrong.
If you’ve already disputed the false information in your credit reports and no discernible action has been taken, you can file a lawsuit against the accused organization.
There have been many cases in which many debt-free Canadians have been wrongfully billed, and this becomes their debt.
If this is your case, then you should consult a lawyer about your possible options.
Running Away from Credit
We’ve heard a lot of amateurs talking about how having no credit means you don’t have to pay any debts. This may look great on paper, but in real life, it creates a lot of problems. It is extremely difficult to buy a home or car on the go, and having no credit history means that you don’t have a good credit score.
It can take months, if not years and decades, to save up for purchase that big.
In Canada, even renting an apartment becomes difficult without a credit history and record since most landlords request a copy of your credit report.
Letting Yourself Slip
It is very common for people to forget to make a payment or make a late payment because of financial reasons. However, your intention does not change the harm that’s done to your credit.
You should make sure to pay at least the minimum payment every month.
Since payment history is the largest fact when formulating credit rating, late payments, even if only once, can affect your credit rating seriously.
Credit histories account for around 35% of your credit ranking.
There have been many instances in Canada wherein a debt collection agency threatens to sue someone because of their outstanding debts.
If this is your case, you should contact a corporate law firm as soon as possible because. They can guide you and provide you with necessary information about the laws regarding outstanding debts.
One way you can avoid making these mistakes is by setting up reminders on your calendar to make sure you request your credit reports, check them, and pay your dues on time every month.
If you pay bills from one card, it is possible to avoid making late payments if you set up automatic bill payments.
It is extremely important to keep a good credit score, especially now more than ever, because it keeps you prepared for the worst and the best.
In cases of personal financial needs or taking a home loan, having a good credit score always works out in your favour.
Thanks for reading, please let me know your thoughts and comments below.
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Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.