Everything About Credit and Credit Scores You Need To Know and Then Some


How To Build Credit The Right Way

By David Weliver

You can trust the integrity of our balanced, independent financial advice. We may, however, receive compensation from the issuers of some products mentioned in this article. Opinions are the author’s alone, and this content has not been provided by, reviewed, approved or endorsed by any advertiser.
Wondering how to build credit from scratch? Worried you haven’t started building credit yet? Here is what you need to know to build good credit for the first time.

How do you get a mortgage, car loan, or apartment lease? By presenting the bank or landlord with a good credit history that demonstrates you’ve been financially responsible in the past.

But, how are you supposed to get approved for a loan or credit card if you’ve never had one before?

It’s the ultimate catch-22: No credit card? No credit history. No credit history? No credit card.

If you’re panicking because you don’t know how you’ll get that student or auto loan you need because you don’t have prior credit history, relax: It can be done.

Everybody starts life without credit. We’ll walk you through how to good build good credit fast—even if you’re starting from scratch.

Table of contents
Get help from a family member who has good credit
Get a starter credit card
Apply for a credit-builder loan
What about student loans?
Frequently asked questions about building credit
Read more at: Best build credit the first time.

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You have to be careful with debt collectors because dealing with them can affect your finances in some unexpected ways. For instance, agreeing to repay a debt can restart your debt’s “statute of limitations.” This is often confused with the time frame on your credit report, though, so let’s clear up the confusion. 

Your debt’s “statute of limitations” gives creditors the right to sue you for a limited amount of time when the debt is past due. The time frame varies by state, but once it expires, those unpaid debts are consideredtime-barred,” and a collector can no longer sue. As the FTC warns, talking to a debt collector can restart the statute of limitations on time-barred debts.

We’ve told you how this works in detail, but many people believe this is a myth. It’s not, but the confusion lies in your credit report. Typically, negative items like unpaid debts remain on your credit report for seven years. Settling a debt will not restart that clock—it’s totally separate from the debt’s statute of limitations. In short, if you settle on a debt, the statute of limitations may be restarted on it, but it will still drop off of your credit report in seven years from the time it was delinquent.

Read more at: Difference between debt and the statue of limitations.

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If you have credit, you’re assigned a credit score, which is a three-digit number between 300 and 900 that measures your creditworthiness. A high score is good whereas a low one is not.

Lenders use your score to determine whether or not they’ll lend money to you and landlords will check your score to decide if they’ll accept you as a tenant. Also, insurance companies and potential employers will sometimes look at your score.

How your score is calculated

There are two major credit reporting agencies — Equifax and TransUnion — that collect information from banks, lenders, internet and mobile phone providers, and other creditors to generate your score. The agencies collect information from these providers about how much you owe on each account, your credit limits, and if you pay your bills on time. This information is then used to create your score.

The agencies have proprietary scoring models and the way they calculate your score is a secret. But there are certain factors that can affect your score more than others:


  • Payment history (35 per cent): Your payment history shows whether or not you pay your bills on time. It also shows if you’ve declared bankruptcy or had wage garnishments. Negative information stays on your file for up to seven years. The length of time the information remains on your file depends on the province or territory you reside in. You should always pay your credit card bills on time. If you can’t, ensure you make the minimum payments.
  • Amount owed (30 per cent): The amount of credit you actually use counts towards your score. Lenders will consider you a higher risk if you use a large percentage of your available credit. Using less than 30 per cent to 35 per cent of your available credit is ideal.
  • Length of credit history (15 per cent): If you’ve had an account open and have used it for a long period of time, it’s good for your score. But if you close your older accounts and your remaining accounts are newer, it could hurt your score. To improve your score, keep older accounts open even if you don’t need them. Also, use them occasionally to keep them active.
  • Types of credit (10 per cent): Having one type of credit product may lower your score. It’s better to have a variety of credit, such as a credit card, line of credit, and loan. However, you should make sure you can afford to pay back the money you borrow.
  • New credit requests (10 pe cent): When you apply for most types of credit or someone asks for your credit report, it’s counted as an inquiry or a hard hit. Having a lot of these in a short period of time could negatively impact your score so you should apply for credit only when you need it. When you’re shopping for a mortgage, try to do it in a 14-day period since all inquiries made during this time are often considered as one inquiry. Requesting your own credit score or report is recorded as a soft hit and won’t affect your score.


What’s a good score?

Having a good credit score can mean the difference between having your credit card application approved or denied, or getting the best mortgage rate. Here’s a general guide to credit score ranges:


  • 350 to 559: Poor
  • 560 to 659: Fair
  • 660 to 724: Good
  • 725 to 759: Very good
  • 760 or more: Excellent


How to get your credit score

To get your credit score, you’ll often need to pay a small fee to Equifax or TransUnion. But there are some reputable sites in Canada, including RateHub.ca, that allow you to get your score for free with no catch. However, beware of sites that’ll give you your score for free but make you sign up for a paid service.

The bottom line

Your credit score is one way to measure your financial health. If you have a great score, you should ensure that it doesn’t drop by making responsible financial decisions. But if your score is bad, you should take steps to improve it so you can qualify for lower interest rates and save money over the long run.

Read  more  at: What’s In A Number?

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by Jill Duffy | Personal Finance


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Etsy store header – Vintage (5)BY SARA RONCERO-MENENDEZ

Most high schools don’t teach how to balance checkbooks or navigate loans, though plenty of young people wish they had more access to formal financial education.


While it would be impossible to fit an entire economics class in one article, the first step to grasping more complicated financial concepts is to learn the fundamental terminology.

Understanding basic financial terms can help you make the most informed choices about your fiscal path. Here are just some of the most frequently used terms you’ll need to know.


A popular retirement plan offered by many employers, a 401(k) allows you to set aside a certain percentage of your paycheck into a retirement fund, before taxes.

Some companies will match a portion of your yearly 401(k) savings as an incentive for participating in the program. The funds in your 401(k) are then invested into different ventures, such as bonds, money market accounts and stocks. However, you will not lose your savings if your employer files for bankruptcy.

You will receive the money as an annuity once you retire, but if you choose to withdraw the funds before turning 59.5 years old, you will have to pay taxes on it.

APR Financing

Annual Percentage Rate (APR) is the rate of charge or interest, usually as it applies to credit cards. Different cards have different APRs. It’s important to know which rate you’re entering into, since it will affect the price you have to pay. Credit card companies can apply APRs to late payments, purchases and cash advances.

“APR financing” refers to the price you pay with the APR rate included, a price added top of taxes, essentially. For example, if an ad indicates a car costs $30,000 with 0% APR for 60 months, it means your payment (with taxes, dealer’s fees and tags included) will not include APR during those first 60 months, as you pay off the car. If the deal instead comes with an APR rate of 0.8%, you’d add about $2,400 to the lease, which will be integrated into the car payments.


An annuity is a continuing, fixed annual payment for a certain amount of time, from one party to another. You can receive annuities from insurance companies or retirement funds. For example, one may receive an annuity from a deceased family member’s life insurance policy.


Assets are anything you own that can be sold or converted into cash. Some assets include real or personal property, cars and other vehicles, jewelry or investments, such as a 401(k). Unless your stamp collection or old action figures are super rare, those don’t count as assets, however.

Credit Score

The Millennial s Guide to Personal Finance

The web contains a seemingly endless lineup of credit score reporting sites, each with its own catchy jingle and commercial. It might seems like a lot of fuss, but your credit score is important. It essentially indicates to lenders how trustworthy you are, in other words, how likely you are to pay back your loans and debts. Your credit score can affect your ability to make bigger purchases down the road, such as cars or houses.

The easiest way to build credit is to qualify for a credit card and pay off the balances on time. The most common score is the FICO score, which is determined by payment history, credit use, types of credit use, length of credit history and applications for credit. The score ranges from 300-850.

The three major official reporting companies are TransUnionEquifax and Experian. You’ll also find unofficial free credit scoring sites, like CreditKarma and Credit Sesame. However, keep in mind some of these “free” sites might ask for a credit card, so make sure to cancel the service before your trial period ends, if you wish.


Your Debt-to-Income (DTI) ratio is especially important for mortgages. There are two types of DTI: the front-end ratio and the back-end ratio. The front-end is the percentage of your income that would go to paying housing-related costs, such as mortgage and real estate taxes, while the back-end represents how much of your income is going to other debts, such as credit card bills and car payments. If either of these ratios is too high, it might keep you from getting a mortgage.


An Individual Retirement Account (IRA) is a retirement plan that is not sponsored by an employer. Since you are solely responsible for adding money to an IRA, you have a wider ranger of investment options. Like the 401(k), most IRAs are tax-deductible.


liability means you owe money or payments to another person or establishment. For example, student loans are a liability — you have to pay back the sum of the loan, plus interest.


Liquidity is the degree to which you can sell or convert your assets into money, when needed. Liquid assets refer to those assets which are easily bought and sold, making them easy to convert. It’s often smarter to invest in liquid assets, like bonds and stocks, than assets which take longer to sell, called illiquid assets.

Net Worth

While the concept seems a little abstract, every person is worth a monetary sum, but not for your organs or your potential productivity. Your net worth is actually your value if you were to sell all your assets and pay off all your debts. While you’re probably not going to give up everything you own and liquidate all your assets, it can be useful to know how much you’re worth when considering big financial decisions.

Calculate net worth by subtracting your total debt from the sum of your total assets. If you get a negative number, you have more debts than income, which is typical for many recent grads. A positive number means you’re making or have more than your debts, meaning you have more of a budget for paying off loans.

Savings Account

Checking accounts are simple — they’re places to hold your money for quick access. A savings account works a little differently. While your money is still accessible, there are often fees and time delays associated with savings withdrawals. The advantage of having a savings account, however, is that you compound interest and, like your checking account, it is insured by the FDIC.

There are multiple types of savings accounts, including basic, certificate of deposit (CD) and money market. The basic savings account allows your money to grow at a set interest rate, though often a relatively low one. The CD account has a high, usually fixed rate of interest, but it also has to grow for a set amount of time. If you take money out of the account before the appointed time, you will have to pay a penalty. It’s best used for saving money for a big expense down the road, like buying a car or returning to school. A money market savings account will have high rate of interest that will vary with the market, and your withdrawals from this account may be limited by the bank.

Read more at The Millennials Guide To Personal Finance

Below are some helpful tips and infographics that you can take advantage of as well..






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