Credit over 60
Credit is an important money management tool. It can come in handy for emergencies, help to make sound investment purchases such as real estate, and even credit cards can provide some protection against defective goods.
But some older consumers find it difficult to open a credit account. It’s unfortunately true that credit card companies recruit university students, assuming that their income will go up or their parents will bail them out if necessary – and virtually ignore the older market. At particular risk are older women who have no personal credit history. One of the best ways to protect yourself is to establish credit now. But even if you haven’t, there are ways to approach borrowing money that can help you reach your goals.
Check your credit history
In order to obtain a copy of your personal credit report, also known as your credit rating, you can submit a request to either one of two credit reporting companies in Canada: Equifax and TransUnion. If you make your request by mail, they are required to supply you with one free report per year. For a nominal fee, you can access your information online. (Contact information is available at the end of this article.)
This credit rating is the main tool used by financial institutions to measure the level of financial risk you represent. It is established from various factors such as your past and current level of debt, your debt repayment or bill payment habits, the number of individual debts, etc.
Surprisingly, fewer than half of all Canadians ever check their credit ratings personally – according to a 2005 survey commissioned by TransUnion Canada, only 36 per cent of Canadians report ever checking their credit score – and Canadians 50 and over (29 per cent) are significantly less likely to have checked their credit score this past year than Canadians aged 18 to 49 (41 per cent).
If you have shared a credit card or other forms of credit with a higher-earning spouse, you may find that your credit history does not include those items. This is one of the many reasons that it’s a good idea to examine your rating.
Establish a credit history and maintain rating
If you discover that you have not established a credit history in your own name, the time to address this is now. One of the easiest ways to start is to get a department store card. Because these cards often have low limits, high interest rates, and the stores have a vested interest in your getting credit from them, so that you will be more likely to shop in their store, they are often willing to give credit where other institutions may be more hesitant.
Ironically, however, if you pay the balance in full each month, it may not help to raise your attractiveness to lenders. Although doing so does establish that you are fiscally responsible, which is important, lenders look for people who will ultimately provide them with profit. So you may want to occasionally pay half the balance and then pay the remaining half – plus interest – the next month on small purchase amounts.
Another type of loan that can help establish a credit record is the car loan. Because the car itself is the collateral, you may find it easy to qualify. In this case, of course, you will want to make sure that you make the payments in full and on time each month.
Of course it’s also essential to maintain a good credit history. Make payments on time, even if all you can afford to pay is the minimum. Do not “bounce” cheques. And examine your credit record to ensure that there are no errors, and that any past credit issues are removed within the proper timeframe.
One additional tip: if your spouse dies, and you are worried you will not be able to qualify for a credit card on your own, contact the account holder for your spouse’s account and see if they will switch it into your name. Although the credit limit may be reduced or the interest rate raised, lenders will often work with you based on your history with the company.
If you can’t establish a credit history
Even if you find yourself without your own personal credit history, there are ways to make yourself more attractive to lenders.
When you apply for credit, be sure that your application reflects all your sources of income – pension income both private and public, spousal support, part time employment, and investment income. You can also provide information about your other assets – property, stocks and bonds, GICs, and Canada Savings Bonds, for example.
If you can show that you made payments on your spouse’s loans – cancelled cheques bearing your signature, for example – lenders may be willing to take this into account. Ask to talk to a manager if you are not getting any help in this area – front line loans officers may have less leeway in using information that is not standard.
If you are still having difficulty in obtaining a loan you may be able to secure the loan against some of your assets, or co-sign with someone who has established credit in the past.
To get your credit report, contact:
Equifax Canada Inc.
Consumer Relations Department
Box 190 Jean Talon Station
Tel: 514 493 2314
Toll-free: 1 800 465 7166
Fax: 514 355 8502
E-mail: [email protected]
Consumer Relations Centre
P.O. Box 338, LCD 1
Tel: (416) 609-2070
Fax: (416) 609-1994