Hello, and welcome back to my channel!
For this video I'm going to be talking about something
so exciting. Okay, I lied...
it's no super exciting, but it's something so important.
And this is just I feel like a lot of people
don't know these very important
things when it comes to credit. So yes, I'm going to be talking to you
about 8 different things you need to know
about credit. These are some best practices,
these are some things that you should be implementing into your
day to day finances.
They're very simple. Lots of them are kind of no-brainers.
But it's just a really good reminder of what to do
and what not to do to make sure you are improving you are
improving your credit score and you're doing things
so they won't hinder your credit score.
So, in this video I'm gonna share 8 different credit
best practices that you
definitely want to know about.
Alright, number 1 is
don't abuse your credit cards. Sounds very
obvious and simple, but a lot of people
you know, don't really know how to use their credit cards properly.
And that's okay if that's you. Don't feel bad. It's very easy to fix.
All it means is whenever you make a purchase on your credit card
pay it off in full. Don't just pay the minimum balance.
Make sure that every time you get that monthly statement
you are paying off the full amount that you owe
and even if you want to be a little crazy
like me you can pay it off as soon as you
make a purchase. Or, whatever system works for you.
Maybe you want to pay off your credit card daily,
or weekly, or bi-weekly. Whatever the case is
you want to make sure that you are paying it off and
it goes to zero. Number 2 is
be responsible with your debt. So that just
means you most likely, most likely,
have more than just a credit card. You might have a line of credit
or a mortgage, student loans, car loan,
whatever. We want to make sure that you never miss a payment.
That you never pay not enough.
We want to make sure that you are paying the full amount
you owe every single month. Because if you don't do that
it could and most likely will
negatively impact your credit score. Number 3 is
pay your bills. Your bill payments come into play
with your credit history and your credit score, so make sure
whatever bills you have, your phone bill, your utilities,
your rent, whatever, you are paying the full amount
every single time or whatever
the payment sequence is. Number 4
is don't max out your credit cards. I know,
you may have never even thought about this but
just because you have a $5,000 limit on your credit card, that doesn't mean that
you should make it go to $5,000 then pay it off. $5,000 then pay it off.
Actually what you're supposed to be doing
is spending between 20--30% of that
credit limit. If you spend more than that it will signal to
that lender and the credit bureaus that you're overextended
and it's just not a good look
and it can negatively impact your credit scores.
So, there's a couple things that you can do.
Obviou sly, if you have one credit card and you keep on spending 80%
of that limit, you can increase your limit so you are always just spending between 20-30%
on that card. Another thing you can do is
get more credit. Either by getting another credit card or a line of credit.
Now, I'm not suggesting go and get a bunch of
credit cards and lines of credit or get more debt. You know how I feel about
debt. I hate it. It's awful.
But that's just something to be aware of, that you
really aren't supposed to be spending more than 20-30%
of your credit card limits
otherwise it may negatively impact your credit scores.
Number 5, don't cancel your oldest credit card.
Some people think that's a myth but no.
It's actually pretty logical. You see, that oldest credit card
has the longest credit history associated
with you. So especially if you've been really good with that credit card
and have always made all of your payments on time, it will have a
good reflection of how you deal with credit
and that will positively impact your credit score.
If you cancel that credit card, then that
credit history will no longer be involved
when those credit bureaus are looking at all those different elements
to determine what your credit score should be.
Now, if you've alreadty canceled your oldest credit card
it's okay, it's not the end of the world. But you probably have the
second oldest credit card, so make sure to maybe keep that.
And if you're like "Wait, that credit card,
I pay a really high annual fee and I actually hate that card, I want to
get rid of it." You can contact that credit card company
and ask to downgrade that card, preserve your credit history though,
make sure that they are going to preserve
your credit history, but downgrade it to a no
annual fee card so you can still keep that
credit history, you still have that credit card,
but you don't have to pay that annual fee. Another to remember though is
most of these credit cards will charge you an inactivity fee if you don't
make a purchase within 12 months, so just
put it in your calendar to make one purchase a year. That's what
I do with my oldest credit card. I make one purchase a year, and then
I don't get charged that inactivity fee. Number 6
is do not open too many credit cards.
So if you have too many credit cards it may also make you
look bad. It may negatively impact your credit score because
it may signal to lenders that again you may be
overextending yourself. Typical rule of thumb is just to have
1 to 3 credit cards. You can probably have more than that
and I'm sure it may not negatively impact your credit score.
It really depends, but the key thing is
don't have too many. 10 is probably too many.
So especially if you really get into this whole
credit card churning thing to get those points
or rewards or cashback or whatever.
If you open too many of them, especially in a short amount of time
it will ding your credit score.
Number 7 is check your credit reports.
Now, this is something you should be doing at least once annually
with both your Equifax Canada credit report
and your TransUnion Canada credit report.
So make sure you put it in your calendar as a kind of
yearly to-do list. But the great thing is
that you can check your credit reports with both bureaus for
absolutely free. I'm gonna include some links below to the
applications. You just have to fill them. mail it to them, then
they'll mail you your credit reports for absolutely free.
But the thing that you're going to be looking for when you get your reports
is any mistakes or inaccuracies or any fraud actually.
fraud actually. So this is something that you
just want to make sure that you're on top of. Now if you do see
any mistakes on your credit reports, especially if it has anything to do with
your name, your address,
your work history, anything like that,
then you go to the bureau directly to say "Hey,
there's a problem, you need to fix this. It may be
negatively impacting my score because
there's something wrong with the information that you input into my
credit history. Now, if you find on your credit report
that it says you have a credit card that's still open but
you know that you went through the process and closed it
the first thing that you're going to want to do is go to that credit card company
and say "Hey, you misreported something
can you please fix it?" Now, if they say
"I don't know what you're talking about,
it's closed on our end, there's nothing we can do."
Then you can go to the credit bureau to see if they can fix it. And number 8 is
check your credit scores. If you have no idea
what your credit scores are, that's okay. There's plenty
of different ways you can go about it.
Really what your credit scores mean is not how good you are with your money
or how much your net worth is or anything like that.
It's really just a score that shows lenders
or creditors how credit-worthy you are.
So, how responsible have you been with
credit in the past. And if you have a high credit score,
then those lenders who will give you maybe
a mortgage or car loan
will be more open to giving you a bigger loan
at a better interest rate than if you had a lower
credit score. So that's really the whole point of credit scores.
It has nothing to do with how good you are with your money.
And they're not something to obsess with.
It's not a grade on how good you are. It really is just showing "Hey,
how responsible have you been in the past?
Do we trust you with us lending you some
money. And will you pay it back?"
So the reason you really want to have a good credit score is for if
in the future you do want to get
say a mortgage, then you will hopefully get
a really good rate and also the amount
you need to borrow. So that is it. Those are the 8...
should I go through them right now
so you don't forget? Okay,
let's go through them real, real quick. Number 1,
don't abuse your credit cards. Number 2,
be responsible with your debt. Number 3,
pay your bills on time and in full every time.
Number 4, don't max out your credit cards. Make sure to spend
only 20-30% of your credit limit.
Number 5, don't cancel your oldest credit card.
Number 6, don't open too many credit cards.
Number 7, check your credit reports at
least once annually. And number 8, check your credit scores.
Now, you don't have to check your credit scores often.
Maybe just do it once annually or if you are
preparing to get a mortgage or some other type
of loan, that is a good time to check it.
But I feel like there's no harm in checking it.
I'm gonna go more into how to check your credit scores
in my next video, so get ready for that.
I hope you enjoyed this video.
I also have a freebie download for you. If you go to
jessicamoorhouse.com/creditbestpractices
or just check the link in the description
you can download a free PDF of everything
I just went through. Now, if you liked this video, please like it.
If you have anything to say, if you have a question, if you have
an idea for a future video, make sure to
comment below.
And of course if haven't already, make sure to subscribe to my channel.
See you next time!