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I know, you and your neighbor know, everybody knows that it's highly recommended to maintain a good credit report. It goes without saying, but what proportion of "everybody" actually knows the determinants of a good credit report and the most realistic way to improve it? "Not the majority" would be an answer close to the truth. Let's change that.

Credit bureaus

Who's in charge of creating and updating credit reports and what inputs are used in these processes? Credit bureaus are the only institutions allowed to produce credit files, and the inputs used in their constitution come from various businesses, far more than what too many people imagine.

Do you think that only late payments on your credit cards or lines and your personal loans affect your score? That would be a big error in judgment. In fact, all businesses that offer financing options (furniture and appliance stores, for example) or services that require a monthly payment (mobile or residential phone services and Internet providers) have their say in your credit score's calculation, sometimes unbeknownst to you. They can and will provide damaging informations to credit bureaus, if necessary (especially in case of late payments).

In other words, if you were in a position where you had to choose which bills to pay this month (for many months), and that you always prioritized the debts financed through your bank, you could be in more troubles than you think. I don't mean to rub salt in the wounds, because you couldn't make all your monthly payments anyways, in this scenario, but to make you realize the extent of the inputs used in a credit score's calculation.

A bad credit report's deadlock

If most businesses that offer in-house financing options can affect your credit file, you should know that they can also access it before selling you or providing you with a service or a product. One can then easily find himself in a deadlock where it seems that everyone is turning against him.

The slippery slope slowly becomes a vicious circle: even if you're doing better, nobody (almost, we'll come back to that in a second) will lend to you because of your bad credit score, bad credit score that you can't improve since no one is giving you the opportunity to prove your new repayment capacity. It's far more than just a mere inconvenience considering the length of the list of businesses involved and the need that we have for their products and services. If you're in that kind of predicament as we speak and that you've never heard of 2nd and 3rd credit chances, you should start to seriously consider this option.

Homemade car financing: a realistic solution

Cars probably come on top of the list of necessary goods and services that we (generally) can't pay in one time. If banks turn their back on you, you probably already know that you can finance your car purchase with a car dealer that offers this kind of services, like Style Auto pre-owned car dealership in Laval. However, you may not realize all the good it could do to your credit report by helping you get out of the vicious circle described above.

These businesses' great flexibility and their acceptance of hard cases (including bankruptcies, absence of revenues and people with no credit history) with their 2nd and 3rd chance options represent your best chance to demonstrate your new payment capacity to an establishment allowed to relay informations to credit bureaus. Paying back your car loan is a first step that could lead to your credit score improvement and your acceptance by a growing number of product/service providers.

If you'd only remember from this short text the determinants of your credit score and the best way to improve it, it's okay because that's the essential part.

Posted in on Jun 16, 2019

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