Today’s discussion …. your credit rating! No need to worry if this sounds a bit daunting – this time, I will be talking about what to expect when your credit rating goes up! So it’s a good thing!
Most people probably know that your credit score is like the window to your soul, your financial soul anyways, according to loan providers. On a more serious note though, it does actually exude lot of power over your ability to secure any well-needed financing.
This is why, monitoring your credit rating on an ongoing basis is highly encouraged as a part of your overall financial responsibility. This is an area I have mentioned before, and since learning more about this topic, I have been able to stay more on the mark.
After talking about how to improve your credit and how to access a copy of your credit report, now I want to look at what to expect when your credit rating goes up.
Typically, once you have taken steps to rebuild your credit, it is a bit of a waiting game. This is due to that fact that your credit history will actually be adjusted within a 1-3 month window of time. So this poses the question: how will I know exactly when my credit score has be adjusted?
PART ONE: How to find out if your credit rating has gone up?
1) Check Credit Report
If you know you have made changes in the last few months to improve your credit, you can take it upon yourself to apply for a copy of your report from one of the Canadian Credit Bureaus. Taking into account, that you may request this copy too early, i.e. before the changes have been reflected in your report.
Since, the timing for this action may be somewhat convoluted, you may not know how to accurately gauge when you should request your credit report to find out if your score has gone up. While, this still maybe a viable option, if you want to remove any uncertainty, there is also another method of pinpointing when your credit score has improved.
2) Receive Credit Alerts
A second option is to take advantage of an automatic alert system through the Canadian Credit Bureau, Equifax. This service entitles you to receive direct email notifications, with any changes to your credit information. While there is a fee for signing up for this service, there appears to be many positive aspects as well that can help ensure you are not only up-to-date on your credit history and score, and also avoiding the sense of uncertainty you may have about when any changes to your credit score will in fact be available. This service is offered 24/7 basis and any key changes in your credit information will be sent to you every 3 months.
I definitely would like to take advantage of this service as I think it would be such a convenient way to access this information. With that said, I do still plan to request a copy of my full report from time to time, however, I would like to use this alert method as a way of bridging the gap. With such a busy family calendar, I think this would help save me some time and maybe even a bit of energy.
PART TWO: What to do after your credit rating goes up?
In addition to knowing when your credit score has gone up, I also want to know what steps should I take after my credit rating has gone up and how will lenders respond to this credit improvement?
As most lenders rely on your credit history to illustrate your previous loan and credit behaviours before they either approve or reject your loan application or credit extension, you are likely to appear more credit-worthy since your score has gone up. Loan providers are likely to see that you have taken steps to improve your credit and are approaching your loan obligations more responsibly and/or effectively. Ultimately, with your score in better shape, the more likely you are to be able to pay back your loan and lenders will take that into consideration.
When you do secure a loan, you are also likely to be provided with more flexible loans options and features (i.e better interest rates, terms, loan amount, etc). So, now what?? What should your next step be, following a successful credit score increase?
More credit: YES or NO?
Once you have paid off some debt and improved your credit score, you may wonder if it is wise to take out more credit or to leave well enough alone for the time being. My first reaction was much the same. Once I found out my credit rating had officially gone up, I thought it best to lay off with the credit and not add to my debt, because that clearly was the better decision.
Then I learned that sometimes taking out a small loan can actually help your credit, instead of hindering it. If you have been re-establishing your credit after bankruptcy or a divorce, for example – taking out a small loan can give your credit the boost it needs. After that though, being conscious and careful that you make consistent payments is key to your credit remaining strong.
On the other hand . . .
If you have finally regained your sense of balance – your credit score is on the rise, perhaps holding off from incurring further debt for a certain amount of time, it a good way to go instead. If you can hold off on taking on more credit, even for a while – that may be the safer bet.
You may be wise to wait until you get into a situation where you absolutely require more financing – and because you have been able to keep your credit in check, you are likely to find that many of the barriers that may prevent someone from getting a loan, have been removed.
I think this side of the fence, is where I will remain for now. Although it is always a good idea to see both sides of the story, having the full perspective can make it easier to know whether you should turn left or right, at that next juncture.
