Credit Scores and Ratings

What your credit score means, when it matters, and how you can improve it.

The Importance of a Good Credit Rating

Q: I’m having a hard time getting my son to understand the importance of a good credit rating. He lives at home, works full time but struggles to keep on top of his bills. Why having a good credit rating is very important.A: Your son, like a lot of young people today, has yet to discover the true value of a good credit rating. Ask him to tell you what it costs to have a poor credit rating in comparison with a good one. In all likelihood he’ll get a puzzled look on his face. The answer is that a good credit rating doesn’t cost you anything. All that is required is that you use credit carefully, pay your bills on time and set money aside to manage unforeseen emergencies. A sufficient payment history that reflects positive credit behaviour is the final necessary ingredient. So what’s the big deal? The big deal is the price your son will pay for not having a good credit rating. A poor credit rating could cost your son his chance of getting his dream job, as many employers check credit reports before making a job offer, or a safe place to rent, as many landlords won’t rent to people with poor credit. A credit report with a couple of small collection items and a record of slow payments might add two additional percentage points on a mortgage application. Using a mortgage amount of $250,000 (three-year term, 25-year amortization) the extra two percentage points will amount to almost $15,000 in additional interest payments! If your son is still not convinced, ask him to do his own research and find out for himself. Afterwards, offer to help him get his finances on track or steer him toward someone you trust. Corrective steps and time will help your son build an excellent credit rating. The best things in life are free and this certainly applies to having a good credit rating, especially when you consider the painfully expensive alternative. << Back to the Blog main page Related Topics:  

Worried about your credit?

Get answers from an expert.

Whether it’s about keeping, building, or rebuilding your credit, we can help if you’re feeling overwhelmed or have questions. One of our professional credit counsellors would be happy to review your financial situation with you and help you find the right solution to overcome your financial challenges. Speaking with our certified counsellors is always free, confidential and without obligation.

Related Articles

Workshops & Webinars

In-person or online, learn about credit, debt, and money. Ask questions and get the best tips!

Not on a Credit Report?

There’s more to obtaining credit than just what’s on a credit report. Here’s what won’t be shown.

Bad Credit Loans

There are ways to get out of debt without a high interest loan, even if you’ve got bad credit.

 

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *