Consumers in and around Victoria may not be aware of the importance of how they manage debt in their everyday life. Most lenders and creditors report to the two Credit Bureaus in Canada, reporting everything from hard inquiries on your accounts to on-time or late payments on credit cards.
The Importance of Good Credit Scores
This information is weighted as high or low impact on your credit score. The higher credit scores signal an individual who is able to manage debt and to stay timely on payments. It also indicates a low debt to income ratio, which makes the individual a trusted borrower for credit from the perspective of potential lenders or creditors.
Many people that contact 4 Pillars in Victoria to address debt issues have very low credit scores. This happens over time with missed or partial payments, overuse of credit, or financial issues that limit the ability to meet debt obligations.
The Role of Managing Debt in Building Credit Scores
Ironically, having no record of managing debt, which is also known as a thin credit file, can be just as problematic as a poor debt management record. A thin credit file leaves the creditor without any proof the creditor is reliable as there is simply no history.
There are ways to correct a bad credit score or a thin credit file with the strategic use of credit cards and loans. The professionals at 4 Pillars work with individuals and couples to determine how to improve their credit scores through the use of good debt.
Good debt includes paying for large purchases, such as homes and vehicles, and making monthly payments on time. Bad debt, on the other hand, includes large credit card balances that are not paid off on time. Talking to a 4 Pillars debt consultant is the first step in creating a plan to remove bad debt while effectively adding good debt.