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Getting to Know Your Credit: 3 Important Tips

As you move through adult life, your credit matures along with you and acts as a magic key of sorts. It allows you to rent your first apartment and sign up for your first cell phone plan. Later on, it gives you the ability to take out loans or achieve life goals such as purchasing real estate and vehicles.

So why do so many of us have an arm’s-length relationship with it? In August, we conducted a survey of 1527 Canadians, asking them about their attitudes and behaviours regarding their credit. What we discovered was surprising: a large number of respondents claimed they don’t check their credit report, don’t research credit cards, and have never negotiated terms with their provider. 

In this article, we’re going to dive into a few of our findings and explain why it’s so important to know your credit inside and out.

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Checking your credit report

 

In our recent survey, we found that only 1 in 3 Canadians (32%) checked their credit report, with those who claim to be very knowledgeable about credit scores more likely to have done so and those from Quebec less likely (only 24% compared to 35% for the rest of Canada). 

 

Why it’s important

 

Your credit report is a history of you as a credit user. It contains your personal information  including place of employment, payment history, and any instances of bankruptcy or collection actions. Your credit report is created as soon as you apply for a loan or credit, and your lenders will routinely send updates to credit reporting agencies letting them know if you’ve missed any payments or gone over your limit.

It’s important to keep track of your credit report, as future lenders will rely on it to decide whether or not you’re a safe and trustworthy borrower. A bad one could affect your ability to borrow money, upgrade your credit card, or be approved for a mortgage, among other things.

 

How to access your credit report

 

In Canada, there are two main credit bureaus: Equifax and TransUnion. Both produce credit reports, so you’ll always have more than one available. If you want an immediate credit report online, Equifax now provides that service free of charge, but both will send you a free report through traditional mail if requested.

Make sure you’re prepared with two photocopied pieces of government ID, then visit Equifax and TransUnion’s respective websites to download a credit report request form. 

 

Researching credit cards

 

When surveyed, only 15% of Canadians said they researched credit cards in the last year, and just 14% claimed to have applied for a new credit card. While this could reflect the fact that most Canadians are happy with their current credit card, it may also reveal a lack of interest in exploring all available options.

 

Why it’s important

 

When it comes to credit cards, it’s important to find one that gives you the most bang for your buck, but that can mean different things depending on who you are. 

For instance, if you’re a frequent traveller who uses your card while abroad, signing up for a travel rewards card with a higher annual fee may be worth the money. If you’re someone who only uses your credit card for basic necessities like gas and groceries, however, a no-fee, category-specific cash back rewards card might be a better fit. 

Either way, researching different types of credit cards is important before you make a decision. Everyone’s situation is unique, so you want to make sure the card you pick matches your lifestyle and particular set of needs. If not, you could be stuck with a credit card that costs you more than it gives you. 

When exploring options for a new card, make a list of qualities you’re looking for, starting with “must-haves” all the way down to features that would be nice, but aren’t essential. Then, cross-reference this list with card details, narrowing your choices down until you’ve arrived at a winner. 

It’s also worth noting that, while your current card may have been a great choice when you originally signed up for it, life can change. Take stock of what your current priorities are, and ask yourself if the card you’re carrying reflects those. If it’s still a great match, that’s fantastic! If not, it may be worth trying to find a primary card that’s more relevant to your current circumstances.

Not sure which card to choose? Let us help you

Negotiating credit card terms

 

While it’s entirely possible to negotiate terms with your credit card provider, our survey revealed that many Canadians aren’t aware of this. Only 4% of those queried claimed to have done so. 

 

Why it’s important

 

If you’re struggling to pay off interest-bloated credit card debt, the battle may seem depressing and unwinnable. Most providers charge a purchase interest rate of at least 19.99% which can grow your balance into something unmanageable if not dealt with. 

This is why knowing your options is so essential. Many users with credit card debt may feel intimidated to contact their issuer, fearful that they’ll be given a harsh lecture, but these fears are unfounded. The fact is, credit card providers exist to make money, and their largest profits come from charging interest to users with unpaid balances. If you’re someone paying a large amount of interest every month, it makes sense for them to work with you and keep you happy. The last thing they want is for you to move your debt over to a balance transfer card from another bank. 

Knowing this, you can use that position to your advantage when negotiating over the phone.

 

How to negotiate credit card terms

 

To begin, contact the customer service number on the backside of your card. Once you’re able to get a representative on the line, explain to them that you have enjoyed being a customer of theirs, but are finding it difficult to pay back your existing debt at their current interest rate and are considering moving your balance elsewhere. It helps if you can do some research on a few balance transfer offers from other providers, giving you some quotable examples of lower interest rates in the marketplace. Let them know that you don’t want to leave and would like to negotiate for a lower rate.

If the person on the line tells you it’s not possible, ask to speak to a supervisor. Once you’re on the phone with them, reiterate what you said to the original customer service rep, emphasizing that you would much rather stay on as their customer and would only want to take your debt to another issuer as a last resort. With this approach, you’ll have at least a 50% chance of success. Your provider may not be willing to match the ultra-low interest rate of a balance transfer card, but will most likely agree to lower your current rate by a certain percentage, making it much easier for you to pay off your debt.

Finally, make sure to get the new interest rate agreement in writing. That way, you’ll have proof in case the rate fails to change after your conversation.

 

The bottom line


While using a credit card regularly and paying your bill every month is great, there’s a lot more to understand about your credit if you really want it to work for you. Regularly checking your credit report, making sure you’ve done your research on prospective new cards, and understanding your options when it comes to negotiating terms are all important steps to being a credit wizard. Use our tips above, and share your opinion on our survey results (or any tips of your own) in the comments below.

 

ALSO READ:

5 Credit Card Myths (and Truths)

How Many Credit Cards Should I Have?

Does Switching Credit Card Issuers Affect Your Credit Score?

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