What do you regret most about not having learned in school? How to establish a budget, how to do your own taxes and/or everything regarding your credit file and score? Although the first two elements are very important, let us focus on the third one.
Confusing Terms
One of the big difficulties with financial/credit literacy is a poor understanding of the associated terms. We all agree that a credit file is an extremely important document managed by credit bureaus (linked to Equifax or Trans-Union on a national scale) and which contains detailed and confidential information (credit, banking, civil, judiciary, etc.). Who supplies the credit bureaus with this information? Your creditors, and know that they also have the power to give you a rating (not the overall credit rating, but just a rating) which reflects your paying characteristics and habits. Your credit score will then be calculated based on those ratings found in your credit file. The tally of your score will be situated between 300 and 900. Points.
Important Points Often misunderstood
You have probably already read many articles about credit scores and the best ways to straighten it or keep it. Our objective here is to present to you some elements that are generally not very well known from the public. For instance, when you apply for credit, you actually have something to lose. The number of refusals that you accumulate is an important and heavy element that weighs in on the evaluation of your credit score. In addition, even though it may seem slightly contradictory to the previous point, just because you are getting credit raise offers by credible institutions like your bank for example does not mean you should accept them. The stability factor (job, remuneration, number of credit lines under your name and their history, etc.) is also scrutinized by credit bureaus. Finally, and it will most likely seem like a surprise to most of you, respecting all your credit payments is a good thing, but not the best you can do. Indeed, paying the totality of your credit accounts every month is not an optimal approach if, during the period in question, your balance has gone over half of your limit. As a general rule, the balance of your account should not exceed (at least not for extended periods of time, let alone on a regular basis) 35% of your limit.
Naturally, we could probably go on and on for pages and pages about lists of all rules and good practice in terms of optimal credit management. Lots of them are indeed sensible and logical, you should nevertheless stay on the lookout for such articles as this one where you are more likely to find precious, helpful, and rarely shared information.
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