We’re talking about credit scores today. Scary, I know! But don’t worry, just like always, I gotchu. I’m here to tell you and show you how you can have a good credit score even if you have a bad financial history.
First, let me be real with you. When I initially started this project with Servus Credit Union, I didn’t feel as though I were qualified. I mean, you now know about my (less than stellar) financial track record and all the mistakes I’ve made along the way. But the more I research and write about financial fitness and the deeper I look into my own financial journey, the more confidence I gain. I’ve been tentative with each consecutive step in the financial fitness plan and this week is no different. I’ve never had the guts to look into my credit score. With my history, I was convinced it was going to be downright sh*tty.
Getting your credit score checked
When you become a member at Servus Credit Union, one of the first steps you have to go through is checking your credit score. Since Servus Credit Union is member owned, they help their members become fiscally responsible and reliable. I didn’t know this until I went in to set up a membership, and when she told me that checking my credit score was our next step, I was so close to coming up with a lame excuse and running out the door. But part of me was curious… how bad would my credit score actually be?
The lowest credit score you can get is 300 and the highest is 900. Here’s a report card type of view:
725-759: very good
I was counting up my financial misdemeanors from the past while she was running the check… 2 collection agencies, severe debt, racked up credit card interest, missed payments and late payments. Hmmm, I’d give myself a solid score of 310 out of 900, if that. I was expecting her to turn to me and say “sorry, we can’t take you in as a member today Jasmin”. But instead, she said “this is one of the best credit scores I’ve seen in a while!” You guys, my credit score was 810/900. That’s a 90%. That’s an A+. Say whaaaaaat? I made her double and triple check that it was the correct name and went through every small detail with her to be sure it was MY credit record we were looking at.
How do credit scores even work?
So how does this even happen? I thought that the only people with good credit scores were those with immaculate records and responsible money habits (ie. not me). But I learned that the system is somewhat forgiving and not as draconian as I once thought. Here are some things I learned along the way:
Credit scores take the last 7-10 years of your credit history into account
Your payment history counts towards a large part of your credit score (tip: make payments on time and be consistent)
Having a variety of credit cards, car loans and lines of credit boost your score
The longer you’ve had credit in your name, the more likely you are of having a higher score
Keep your account balances low (ie. under 35% of your credit limit)
It’s never too late to start building credit
Credit score tips
Choose 1 or 2 credit cards and get rid of the rest
The most important learning lesson for me was knowing that having a credit card in my own name was a huge part of my high credit score. I carry two credit cards and one is a joint one with my husband. It’s the one I use the most because we like to accumulate the same points to put towards something for the both of us. The other one I got when I was still single and simply never got rid of it. I was considering closing the account down because I didn’t see a need for two credit cards, but I’m so glad I didn’t! Since I put a $1000 limit on it when I first got the credit card (smartest decision I’ve ever made), I’ve always been able to pay it off and therefore, have not collected any interest or missed any payments. I use it very seldom and when I do, it’s for super small purchases. This small act, however, over 10+ years has had a significant impact on my credit score. If I had cancelled it and just gone with the joint credit card, my credit score would have been much lower since I would have no proof that I was capable of paying off a credit card.
Checking your own credit score won’t hurt your rating
A lot of people are under the impression that each time you check your credit report, your score will be negatively affected. This is another reason why I had never looked mine up. But here’s the deal… if you get your score checked by a lender (for a credit card or a car loan for example), it will have a small and temporary negative affect on your score. However, if you check your own credit score it won’t affect your rating.
How to check your credit score
I was happy that someone else checked my credit score for me when I signed up at Servus Credit Union, so that’s definitely one way to go. However, here are some other ways to obtain your credit score:
Why knowing your credit score is important
Knowing your credit score is super important. It gives you an idea of how likely lenders are willing to give you money for a car, home or other large purchases. The higher your credit score, the less risk you are to the lender, and the more likely you are to receive a loan. Remember that’s its never too late to start building up your credit and just because you’ve had some financial misdemeanors in the past, it most definitely does not mean that you’ll never have a good credit score. If I can do it, you most definitely can!
My family and I have been in BC for the last week enjoying the gorgeous 30+ degree weather. I bring my runners with me everywhere we go because it’s the easiest thing to pack and you can pretty much run anywhere. That’s actually why I started running in the first place. When I was working for the airlines, I needed a consistent workout and since hotel gyms are never the same, the only thing that worked for me was running. So I’d pack my running clothes and shoes and either hit the trails in and around where I was staying or run on the treadmill.
This past week was a slight fail for me to be honest though. I was super gung-ho to head out with Henry in the stroller to run and explore new trails. So on one of the first days of our vacation, I got ourselves all geared up and took off. It took all of 10 seconds to realize that it wasn’t going to work out well for us. Like I said, it was 30+ degrees everyday and extremely dry and I seriously felt like I was running inside of an oven. I pushed myself for about 2 kilometers until I realized I was being stupid because I’m now responsible for 2 little people and being pregnant and hot is a terrible idea. So we promptly headed back to where we were staying and did squats inside of our air conditioned apartment instead.
The weather is definitely cooler back in Calgary and I cannot wait to hit the trails once we’re home! T-minus 2 weeks until the Servus Edmonton Marathon!
Love, peace & not-so-scary credit scores
*This blog post is sponsored by Servus Credit Union. I am a paid ambassador and all opinions are my own. I truly love this company and the resources they have to offer and would recommend them for anyone looking to achieve optimal financial fitness.