Learning About Credit

Your credit score is a very important thing in life, it can make or break you financially because it is linked to almost every financial decision you will make. It will give you the chance to get a loan for your first car, secure a decent rate for your mortgage, help you to save money at a larger interest rate for your children or grandchildren. Basically a good credit score can make your life and everything you decide to invest in a breeze and a bad credit score can severely hinder you from your dreams of a car, a house without rent, and the ability to plan for a financially sound future for your children or grandchildren.

So how do you get it, how do you lose it, and how the heck do you find out where you stand in this invisible financial rating scale.

The three credit reporting agencies in Canada are Equifax, Trans-Union, and Experian. These companies monitor your financial history when it comes to loans and debt. There are literally hundreds of different websites that will give you your credit score from all firms. One thing to make sure of is that all scores are present when you check it because one bad score can make a huge difference.

The way that you gain credit is by paying your loans and bills on time, repeatedly. This will show that you are financially stable and are able to support the debt and you accumulate. The way that you lose credit is by doing the exact opposite. Not paying your bills on time or at all will ruin your credit score rather quickly, the one thing to remember here is that although you can rebuild your credit score it takes much longer to rebuild than it does to lose.

Staying out of Debt

Debt can be a very sneaky thing with interest rates being as high as they are today. If you are in debt with your credit cards, or behind on your mortgage payments there are a couple of different ways to either give you some breathing room or making your total payments lower. First off you should always invest in insuring your credit cards, this is important because you never know when you wont be able to make a payment. With this insurance you can miss one or two payments on your credit card while you get back on your feet. Another easy step in making sure you stay in the black is organizing your credit card payments in a strategic way throughout the month. make sure that all of your bills come due on days when you will have the money to pay them (pay days). If you believe that you are going to miss an upcoming payment pay-day loans are a great way to get the cash you need. These are available at places like money-mart, they give you money based on your paycheck amount and front you the money until your next pay day. You can also defer your mortgage payments, most institutions will not tell you about this but each year a customer is allowed up to two mortgage deferrals. A deferred payment is a payment that is pushed back a month and is then put onto the end of your mortgage or loan. This is a great technique because it saves you a full months mortgage payment and judging on your mortgage you may not have to pay this amount back for 20 years. These are all preventative measures for card and mortgage holders in order to cover the payment until a later date. These options are very important because debt can raise very quickly due to compounded interest rates.

Hiring Financial Help

1. Anyone can call himself a planner.
To avoid amateurs, hire a planner who's earned special credentials (such as a Certified Financial Planner or Personal Financial Specialist designation) by meeting training standards or having a certain level of experience.


2. Planning is more than investing.
Not all planners offer comprehensive services. Some just give investment advice or focus on one aspect of planning, such as insurance or taxes.


3. Expand your choices.
When hiring a planner, interview at least three pros to find the one who can deliver the services you need and who's compatible with your style.


4. Personal references are a good place to start - but not the last stop.

A reference from a friend or family member is a great way to search for a financial planner. But make sure you've got similar needs as the person who's giving the referral. Go to groups like the Certified Financial Planner Board of Standards and the Financial Planning Association for additional references.

5. Understand how your planner is getting paid.
The three most common set-ups are: Fee-only, fee-based, and commission-based. Fee-only planners don't get commissions for the products they sell - fees are for the advice they give. Fee-based planners may receive commission on some products they sell, but most of their money comes from a fee you pay them. Commission-based planners are paid by the companies whose products they sell.


6. Check credentials.
Check to see if a planner's record is tarnished by disciplinary problems or complaints. Groups that award credentials or state agencies keep tabs on planners and can provide help.


7. Get references.
Ask a planner for two or more of his clients - then follow up and call to find out how a planner performs in specific circumstances, such as during a financial crisis.


8. Express yourself.
The quality of a planner's advice is correlated to how well he or she knows you. Make sure a planner asks questions about your finances, goals, risk tolerance and philosophy. If they don't ask, they probably aren't paying adequate attention.


9. Know what they're selling.
Find out what financial products a planner sells and how much he or his firm earns for making a sale. Be wary of planners who push one product - say, one family of mutual funds or one kind of insurance - as they may not give you the unbiased or comprehensive advice you need.


10. Know yourself.
The best planner will take his cues from you. Before you hire someone, identify the financial goals you want to meet, your assets and liabilities, your risk tolerance, and investment style. Are you self-directed or do you want specialized help?

Things To Do Before Buying A House

1. Don't buy if you can't stay put.
If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner - even in a rising market. When prices are falling, it's an even worse proposition.

2. Start by shoring up your credit.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Aim for a home you can really afford.
The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

4. If you can't put down the usual 20 percent, you may still qualify for a loan.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.

5. Buy in a district with good schools.
In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.

6. Get professional help.
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

7. Choose carefully between points and rate.
When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say three to five years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.

8. Before house hunting, get pre-approved.
Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding.
Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that's about eight to 10 percent lower than what the seller is asking.

10. Hire a home inspector.
Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.

Guaranteed Investment Certificates (GIC's)

Gauranteed Investment Certificates work in somewhat the same way as bonds, you buy the certificate from a bank and you recieve payments of interest off of your intitial investment. These can be given out as the investor chooses from either once a year to multiple times a year. Also as the name implies your initial investment is gaurenteed from the bank so there is really no risk involved other than the bank going under which is very unlikely with a stable economy. Another similarity to bond is that most GIC's have a fixed period of time for the investment to mature or for you to get your money back. There are GIC's that allow investors to collect their money as needed but they are also accompanied by lower interest rates. Investment times for these can range from less than a year up to ten years. Interest rates on these investments can range from around 1 percent in the first year up to roughly four percent by the fifth year.

This is just a quick summary of what GIC's are, for more information or if you want to buy one of these investments you can contact any large bank, or if you have any questions please leave a comment and I will get back to you ASAP.

10 Ways to Protect Your Credit Cards

You may think these ten rules are unnecessary. But if you ignore them, you make it easy for the wrong people to use your cards

1. Never leave your cards unattended at work. There are more credit card thefts in the workplace than in any other single location.
2. If your credit card is programmed to access an Automated Banking Machine (ABM), protect your Personal Identification Number (PIN) or security code. Don't write it down, memorize it.
3. Don't leave your credit cars in your vehicle. A very high proportion of credit cards are stolen from motor vehicles.
4. Always check your card when returned to you after a purchase. Make sure it is your card.
5. When traveling, carry your cards with you or make sure they are in a secure location.
6. Report lost or stolen cards immediately. Most fraudulent use of cards takes place within days of their being lost or stolen.
7. Sign the back of a new card as soon you get it. Destroy unwanted cards so no one else can use them.
8. Make a list of all your cards and their numbers. This key information is helpful when reporting lost or stolen cards.
9. Always check your monthly statement. Make sure the charges are yours. Report them to your card company if the entry is not yours.
10. Never give your card number over the phone unless you are dealing with a reputable company. The only time you should give it is when you have called to place an order.

Saving Money on Mortgage Rates

Mortgage rates fell this last month, which is great news for homeowners like me. My mortgage is up for renewal next year. With any luck, this will be the last mortgage contract that I'll need to sign before my three-bedroom detached house in Barrie is paid off in full. The bank says that I can reach that goal in five years.

Since I have a large amount of equity in my home and a good credit score, I’ll be negotiating for the best possible interest rate. Here are three tips on how ordinary folks like me can do that:
Tip 1: Get a copy of your credit report and credit score. The two major credit bureaus are TransUnion and Equifax Canada. Both provide free and fee-based credit reports for consumers.
You usually have to pay for your credit score information, although I recently got both my credit report and credit score for free from the bank that issued one of my credit cards. Ask your bank if they offer any such no obligation deals.
Check for any inaccuracies on your credit report since those could hurt your credit score. Your credit score is key to getting the best possible rate, experts say. The higher your score, the less risk you represent to the bank.
Tip 2: Compare rates. You can compare posted rates at thestar.com
If you are too busy to shop the market, consider having a mortgage broker do that for you. “A mortgage broker has access to virtually every single product based on your profile,” said Ranjit Dhaliwal, a mortgage broker with Mortgage Intelligence Inc.
In addition to great rates, mortgage brokers can provide advice on the contract’s terms and exit clauses. It is important to note, however, that some banks do not participate in the broker network. Among them are Bank of Montreal and Royal Bank of Canada.
If you shop the market yourself, it is important to remember that too many hard inquiries against your credit profile in a short period of time can actually hurt your credit score, Dhaliwal said. That can be a problem for individuals who may have borderline credit scores. A mortgage broker, in contrast, only needs to do one credit check to shop the market.
Tip 3: Understand how mortgage rates are priced in order to get a discount off the posted rate. While variable-rate mortgages are largely influenced by the banks’ prime rates, fixed-rate mortgages are linked to the bond market.
Banks generally try to match maturities when they finance mortgages with bonds. For instance, five-year mortgages are usually paired with five-year government bonds. You can look up interest rates on Government of Canada bonds on the Bank of Canada website.
The spread between those bond yields and what the banks charge consumers is usually between 75 and 125 basis points. (One basis point equals 0.01 per cent).