How Loans Affect Your Credit Score In GTA

How Loans Affect Your Credit Score In GTA

When you think of loans it might scare you a little especially if you don’t know how to manage your loans. On the other hand, credit is a complex element, and based on your credit status you may think whether the loans will help or harm your credit score.

Certainly, both old and new loans affect your credit scores in different ways

  • The loans can help you strengthen your credit provided you make your payments on time.
  • In case you make late payments on loans then it can affect your credit.
  • They lower the chances to borrow which of course won’t harm your credit score directly.
  • They initially cause some damage to the credit but you can easily overcome the damage upon making timely payments.

 

Strengthening your credit

The credit means the records of a borrower. In case you borrowed any loans in the past and paid it on time then the lenders will lend you further loans thinking that you will follow the same pattern for future loans too.

When you decide to take a new loan it certainly provides you with an opportunity to make the payments successfully and strengthen your credit score. Even if you had a bad credit history in the past or couldn’t build credit, here is another chance to improve your credit with every month by paying on time.

Taking various types of loans also improves your credit. If there is a mix of different loans on credit cards it would be better to improve your credit. For example, a home and a vehicle loan, etc.

Again, make sure that you do not borrow just to increase your credit score. Try to borrow smartly only if you need it and pick the right loan for a specific need.

Missing loan payments affect scores

If you are not making payments against your loans that are either you are paying late or simply stop paying them, then the credit scores will fall quickly and you will face problems getting further loans.

Borrowing potential

New loans not just affect your credit scores but they also decrease your borrowing potential. Your credit history shows the details of the loan you are availing at present including the monthly payments that you need to pay against the loans. When you seek a new loan from the lenders, the lender would check your monthly responsibilities and then decide whether or not the loan can be given as to whether you can afford to pay for a new loan along with the existing responsibility of other loans payment.

In order to find out whether you are eligible for the loan or not, the lenders evaluate the debt and income ratio which helps them find out the portion of the monthly income you get is consumed by the monthly payments you owe. The less the amount is the better.

It means you don’t have to actually borrow to find out that your borrowing potential is affected.

 

A little drop in credit scores

New loans basically lead to a little drop in credit scores. In case you have good credit history then this drop is meaningless and might be short term. On the other hand, if you possess a weak credit score or you are trying to create a credit score as a beginner, the drop can lead to problems. So, do not collect debts prior to applying for a new loan which is an important one for you like a home loan.

Your credit history is checked by the lenders each time you seek a new loan. In this process, an inquiry is set up which shows that someone dragged your credit. Inquiries basically indicate that you are in a financial crisis, need a loan and this makes them drag your credit score down a little. If the inquiries are just one or two it is absolutely fine, but a number of them can seriously affect your credit scores.

If you are visiting lenders it is indeed a smart move and the best option to get a fair deal. You can finish your shopping within a limited period of time like if you are willing to buy a house and started comparing different mortgage lenders then make sure you finish your application process within 30 days. In case of auto loans finish the process in at least 2 weeks’ time.

The above-mentioned information would certainly help you find out how loans can affect your credit score, so make sure you make timely payments against loans. Any help for financial problems contact gtacredit.com or call 416 650 1100

Budgeting On a Fluctuating Income

Budgeting On a Fluctuating Income

Some people do not get a steady income like salespeople, freelancers, or people who are self-employed. They actually face a lot of problems due to fluctuating incomes. It is a nightmare to plan a budget when you have no idea about how much you are going to earn each month. This is a serious problem for those who work on a commission basis or are self-employed.

The income they get depends entirely on their monthly sales or projects they get. Well, if you are among those who earn a fluctuating income and find it really difficult to plan a budget, then read on to find out how you can still plan a budget.

Identify the minimum amount you earn

Before you start creating a budget with fluctuating income, you need to identify the minimum amount you earn. Also, determine your minimum expenses on a monthly basis. For all those who earn a fluctuating income, plan their budget keeping in mind their expenses related to basic necessities like house mortgage or rent, groceries, utility bills, groceries, childcare, transportation, etc.

While following any budget plan it is really important to find out how much you need to make to bear your bills. But, in this case, this step won’t work as the income is not steady. To create a budget for fluctuating incomes just write down the list of essential things and monthly expenses on a paper.

Out of the expenses you have listed there are some fixed expenses like rent, mortgage, etc. Now, try to figure out the expenses that change. They can be grocery bills, traveling expenses, utility gas, etc. Also, write down debt repayments, savings, investment, etc. You may think that these bills aren’t crucial to survive still they are quite important.

Calculate monthly expenses that are optional

 After you filter out the essentials then try to list all other things. While writing down the optional expenses consider the bill for cable television or any other payments you make for entertainment, hobbies, cash spent on sports, or money spent to dine out.

If you are unable to find out the approx spending on non-essentials then pull out some credit card or bank statements to check. Also, try to find out something that had overburdened your pocket in the last few months.

Create emergency fund

 In case you hold some savings already then nothing like it. It is always better to have savings of money for 3-6 months. It helps especially when you have a fluctuating income.

It is always better to create an emergency fund to fight days when you don’t earn a sufficient amount or say nothing. Savings can bridge the difficulties in crucial times.

Staying on income from last month

 Once you created a budget for your fluctuating income and included your unnecessary expenses then you will come to know the amount of money you need for the month without disturbing your savings. You can deposit the money you get the previous month to your savings account.

You can start putting whatever you earn in short term or long term savings whichever suits you. This helps you stay on income from last month.

 Credit a salary for yourself

It is again a step ahead of how you were advised to put your money in a regular savings account in the very first month. Here you will be paying salary to yourself. You may be wondering how is that possible isn’t it? Think about times when you were working hard and earning a fluctuating income but here you will award yourself with a salary.

You can follow the budget for fluctuating incomes and eliminate optional spending which will save money for you. Now you will not end up spending more than earnings.

Pay bills depending upon the income you earned last month

 The money you need for your fluctuating bills, as well as nonessentials, is there in checking account. The right budget that comprises of your expenses and bills for the month is what you have now.

Now you will start paying your bills as per the budget you created that consists of debt payments or paying savings.   If you need an individual account for long term savings then go for it. You can also put some cash back to the regular savings accounts every month and see how money grows.

Mark all your bids as paid and put a zero at the end

As not all bills will be due at the start of the month, you need a proper system to keep track of your spending as the month passes.

Make sure you pay every bill right at the beginning of the month. Pay your mortgage or other bills in the second week of the month. If you are planning to spend on entertainment then make sure you do not spend more. Keep your bills marked as paid

It is not easy to plan a budget with a fluctuating income, but with a proper budget, you can accomplish the task. While you create a budget for fluctuating budgets make sure you find ways that can help you get a steady income. Also, if you succeed to earn more in between, try to save money for the days when you either earn less or absolutely nothing. Do not rely on monthly income; try to save for 3-6 months to have a stable amount in your bank that can back you for at least a month during no or less work.

If you can find income coming from more than one source, it will help you earn a stable income or constant money incoming to your account. Try not to spend on entertainment or things that are not essential. You have to go slow and figure out things that need money on a priority basis. You can create a budget plan for fluctuating income and follow it too. With little dedication and smart planning, you can achieve your goals with irregular income too. It may sound a bit difficult, but it works and with the time you will get used to it. Any help for financial problems contact gtacredit.com or call 416 650 1100

Guidelines for a Better Credit Score in Canada

Guidelines for a Better Credit Score in Canada

Credit card companies and banks look at your credit score while making the decision to lend you money. Your credit score reflects your ability to return credits. It is a number that depicts the likelihood of you repaying money without struggling.

Lenders check your credit history in order to calculate your credit score in Canada. If your credit score is low, they will see this as a risk for lending you money. Different companies have different criteria to assess the level of risk by looking at your credit score.

There are many things that can damage your credit score in Canada, such as delayed payments of bills, applications for a large number of credit cards, etc.

In case of a low credit score, you should first check the information available in your credit report. That information must be correct. If not, contact the responsible authorities. If the information is correct, the next thing you should be doing is thoroughly and carefully reading the report to assess what factors are causing a decrease in your credit score and how you can improve them.

Here are a few tips that can help you improve your credit score in Canada.

Pay your bills on time

You should always be careful about the time you take to pay your bills. Delayed payments of bills can negatively influence your credit score in Canada. Although your credit report does not have records of the payments of your utility bills such as phone, electricity, and cable, there are some mobile phone companies that may inform the credit-reporting agencies about your late payments, which could negatively affect your credit score.

Clear your debts quickly

You should be looking to pay off your debts as soon as possible. Prolonged and accumulated debts have a bad influence on your credit score in Canada.

Be watchful of your credit card limit

Avoid going overboard with your credit card expenses. Do not cross the credit limit on a credit card, no matter what. Your balance should always be well below the limit of your credit card. Higher balance has more chance of affecting your credit score in Canada.

Prioritize the payments you have to make

Canadian credit reports do not generally include mortgage payments, although they are very important. So, it’s smart if you prioritize clearing your credit card, lease, and loan payments first and on time. This will help you maintain a good credit score in Canada.

Limit your credit applications

You should be careful about the number of applications you make. You must avoid making too many credit applications. Too much inquiry from the potential lenders about your credit can negatively affect your credit score in Canada. However, the credit score is not affected if you have queries regarding your own credit report.

Have a credit history

One of the reasons for one’s low credit score in Canada is the absence of credit history. Make sure that you have a proper record of the debt you owed and the payments you made back. Credit history can be built using a credit card.

Maintaining a good credit score is important and has its benefits. By implementing the above-mentioned tips, you can ensure a better credit score in Canada.

Ways your credit score can be an issue

Ways your credit score can be an issue

When we think of credit scores, the first thing that comes to our mind is how will it impact our access to lines of credit. However, that is not all that your credit score accounts for.

Your banks and financing companies are not the only ones who look into your credit history and dig up your reports. There are more people interested in your reputation in the credit world. Whether you are opening a retail account, renting an apartment, or even having a car financed, our credit score will always be at the forefront here.

Your credit score is more than a three-digit number. It determines the course of your life in many ways. Here are a few ways in which a poor credit score can be an issue for you;

You May Not Get The House You Desire

Your credit score can be an issue when the time comes for you to buy or rent your apartment or a house. When renting a house, the first thing the house owner sees is your income, so he can judge whether you would be able to really afford it or not.

The second consideration is your credit score! A house owner would not want to rent out to someone who does not have a proven track record for timely payments. So yes, your credit history and your credit score matters here.

You Don’t Get Your Loans Approved

Whether it is a student loan, or a business loan or even a mortgage, if you have a bad credit score, you are less likely to be approved as your credit score would indicate irresponsibility when it comes to making payments. It is not that you will not get the loan. Maybe you will. It is not entirely off the table for you. However, you will not be in their good books, which is why they will charge you higher than usual interest rates just in case.

It Affects Your Bills

You may not have thought about your credit score affecting something as trivial as buying things. But it does. The purchases you make, your monthly subscription, your club memberships, things you buy online, they all will probably charge you higher prices just to make sure they don’t face loss at your hand in case you can’t make the payment.

Your Next Job Might Not Be As Easy To Come

It is not a common practice in every state, but research shows that almost 46% of companies look into the candidate’s credit reports while considering hiring them. It is to make sure that you will not be likely involved in any kind of fraudulent activity, any embezzlement, or any property theft.

Your credit score has the power to affect even the most trivial aspects of your life. A bad credit score is always an issue. Over time it has somehow become the standard to measure a person’s credibility not just limited to banking but anywhere in life.

HOW YOUR CREDIT HISTORY AFFECTS YOUR CREDIT SCORE

HOW YOUR CREDIT HISTORY AFFECTS YOUR CREDIT SCORE

Bygones are not bygones in the world of banking and finance. What you do in the past, always comes around and determines the course of the future for you. In the world of credit, your worth is determined by a magic number called a Credit score. This is a mathematical way of expressing the creditworthiness of a person who is applying for credit approval.  A credit score is determined by taking five elements into consideration.

  • Amount you owe
  • Length of time you have been using credit
  • The credit mix you have
  • New credit accounts you open
  • Payment history

Every element has a different weightage when it comes to evaluating your credit score. However, your credit history takes the big chunk of it and has the most significant impact.

The first thing a creditor looks at is your credit history, to get an idea of whether you are good at keeping up your end of the bargain or not. Whether you made the payment at a time or not.

The type of accounts, which the creditors consider when checking your credit history, are;

  • Primarily your credit card.
  • The retail accounts you have.
  • All the installments that are due every month including your car installment or any appliance you got on installments. And how regularly you pay them.
  • Your history with other financing companies.
  • Your mortgage payments history.

Your credit history is like a report card that a creditor sees. If he sees that you have made late payments, it will not immediately affect your score but if there are late payments for consecutive months, you will have to face some consequences and those consequences will then have an affect your credit score.

First, you will be charged with late credit fee. Then your interest rate will be increased. That increased interest rate is never a good sign. It shows that they have reservations when it comes to trusting you with credit.  It will also make it more difficult for you to stick to credit then because it will become more expensive and therefore increase the risk of late payments or no payments at all. This stays on your report for a significant amount of time, maximum for seven years.

Other than this your credit score is also negatively affected by any foreclosures you have against you, any lawsuits that were filed against you, wage garnishments, or if someone has withheld any of your property till the time you pay them off. These all factors are also taken into account including bankruptcy in any form as well.

Credit history constitutes 35% of your credit score, thus a good credit history guarantees that you have a good credit score and more options of credit available to you. A low credit score lowers your credibility as it implies the presence of unfavorable information on your credit report.