Our Financial Advisors Explain Factors that Could be Affecting Your Credit Rating financial advisor

Your creditscore is perhaps the most important 3-digit number you’ll have to deal with during your lifetime. In a world where money now occupies a sort of virtual reality the financial industry would likely grind to a halt if not for this effective tool for assessing risk. Maintaining a good credit score then is essential to your being able to successfully navigate the modern, global economy, while letting your credit score slide can take you out of the game for years.  

Trusted Financial Advisors in Toronto Help You Maintain Your Credit Score 

If your credit score it not what you believe it should be there are a number of factors that could be to blame including:  

Payment History - Financial advisors in Toronto agree that no other single factor influences your credit score more than your payment history. If your score has taken a hit a delinquent payment may be to blame. If you believe you’re being blamed for a late payment that didn’t happen it’s in your interest to straighten out the situation as soon as possible. 

Outstanding Debt - If you are carrying large balances relative to your credit limits your credit score could take a hit. Rating agencies want to see activity but aren’t fond of seeing people run up their balances and then take time to pay them down. To the agencies such activity indicates some form of financial hardship in play. 

Overall Credit History - Credit agencies also look at your overall relationship with credit. While this can be advantageous if you have a long history of paying your bills on time it can also be to your disadvantage if you have a history of applying for lots of credit when times get tough. And don’t forget; a late payment 5 years ago can still be dragging you down today.  

New Credit - If you’ve recently applied for a slew of credit cards rating agencies will assume this indicates you’re in some sort of financial difficulty and your credit score will take a hit. Even if you pay the resulting bills on time the agencies still want to see a mix of credit products in your portfolio as a sign that you’re financially stable. 

Types of Credit Currently in Use - You may have been married and had a mortgage but are now divorced and that property was sold off as part of the settlement. As far as the rating agencies are concerned if all you have now is a pocket full of credit cards you’re not as attractive as if that mortgage was still in play. 

The best approach to maintaining an excellent credit score is to mix up the types of credit you use, make all your payments on time, carry low balances on your cards and, if you hit a financial rough patch, talk to financial advisors in Toronto instead of reaching for credit card applications.  

If you’d like to learn more about how to attain and retain the best possible credit score while creating wealth and securing your future talk to Lifecycle Wealth financial advisors, Toronto.  

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