I already sent away for my credit report earlier in 2013. It’s something I feel like I could easily forget, so in my mind it goes hand in hand with filing taxes — but that might just be because historically I have used my income tax refund to make massive debt payments. However, because I moved this year and made some changes to a few accounts (ie. paying off the rest of my loans, downgrading my platinum Amex to something boring), I figured it was time to check again. I’m not expecting any surprises, I just want to check.
I don’t actually think it’s necessary to check your credit report more than once a year unless your credit situation changes or you move. If you’re keeping track of your money, your credit report should match your own records. If something’s off, you have to request a correction. Sometimes a mislabelled or unknown account on your report is a mistake, but sometimes it’s an identity thief opening accounts in your name. If you don’t fix it, you’re on the hook for the debt.
I might be a little paranoid about identity theft, but even though I set up mail-fowarding from my old address to my new one, I still have a fear a bank statement or credit card offer will slip through the cracks.
This is unlikely, but I feel like checking my credit report now and again in March 2014 (after I file my taxes!) is reasonable, after which I’ll go back to my annual schedule.
As per usual, I don’t really care what my credit score is.
Because I’m not planning to take on any new debt, my credit score doesn’t matter.
That said, I know my credit score is probably pretty good because I’ve used a variety of credit vehicles, always made payments on time and have never had a crazy collections agency after me. Well, until last week, but they were calling my new number looking for someone else. When will I care about my credit score? When/if I ever decide to buy a house, and that’s about it.
The credit scoring system differs between the USA and Canada, but the criteria is the same. Where the US grades on a score of 300 to 850, Canada will give you a rating on scale of 1 to 9 for each credit account. In the USA, the higher your number, the better. In Canada, the lower your number, the better.
Want excellent credit? This is what you need to work on:
Payment History – always pay your bills and always pay them on time. Duh!
Use of Available Credit – even if you’re paying off your cards every month, are you ringing them up to the max? Stop! Try to keep your credit usage under 1/3 of the limit. This means if you have a $6,000 credit card, you should never have more than $2,000 on the card.
Length of Credit History – the longer your credit history, the better. If you have a number of credit cards and need to pare down, keep the one with the longest credit history.
Number of Inquires – every time you open a new credit account, like a department store card, or check your credit, like I’m doing asking for my credit report, it will become part of your credit history. A number of inquiries in a short period of time sets off red flags: why are you looking for so much credit all of a sudden? Say no to new loan accounts.
Types of Credit – if you sign a cellphone contract, it’s on your credit report, but it’s not as weighty as a mortgage. Car loans, lines of credit, credit cards, etc. all appear on your report, and while you shouldn’t go out looking for new credit you don’t need, diversity is good. A mortgage and a credit card will serve you better than 6 credit cards alone, just make sure the payment history on everything is good.
For more information on credit tools and tips, check the web! In Canada, the two major credit reporting agencies are Equifax and TransUnion. You can get a free credit report, but your score is something you’ll have to pay for.
Happy credit history building!