6 Reasons Why We Need to be Talking About Credit

Most people don’t know their credit score. Many of those people avoid looking at their credit score for fear of what they might find. Some avoid looking because they’ve been led to believe requesting your credit report will harm your credit or work against any of your credit building efforts, and some don’t check their own credit score because they’re convinced they don’t need to unless they’re looking to borrow. Whatever the reason is, you can’t avoid looking at, dealing with, and talking about credit, and here are six reasons why:

1. Not talking about credit could force you to delay major life plans

If you wait to face your credit until you’re in the market to borrow money, it might be too little, too late. There is always the possibility of finding items on your credit report that come as a complete surprise to you. Whether it’s something you’ve long forgotten, something you didn’t think would have an effect on your credit score or instances of identity theft, surprises happen. They can also take some time to deal with which means a longer route to credit building. Don’t leave yourself in a position of having to wait months or even years to purchase your first home or car, just because you’ve avoided checking your credit. Do it now. Clean up anything that needs it, so when you do find yourself in the market to borrow, you’re all set to do so.

2. While you’re avoiding the topic of credit, your credit score could be getting worse

If you’re avoiding checking your credit because you’re afraid of what you might see, you could be making it worse. Most of us go through credit issues, and many of us have a feeling of failure or regret that stems from it. You are not alone, almost every healthy adult in North America has experienced the fear you’re experiencing. You have a choice now: face the truth and start to build it, or ignore it and make it worse. I think you know what the better option is, and who knows? It might not be as bad as you think.

3. Being aware of and talking about your credit doesn’t harm your credit score

If you’re avoiding getting your credit report because you think it will harm your credit, don’t worry. Obtaining your own credit report is called a soft inquiry - that is, an inquiry into your credit background that is not for the purposes of potentially borrowing money. When you get your credit checked for a credit card, a loan or a mortgage, that is a hard inquiry and can have an effect on your credit score. Checking your own credit will not harm your credit rating at all.

4. It’s easy to obtain your own credit report

As a Canadian, you are entitled to one free credit report per year from Equifax and TransUnion. To grab your credit report and find out your credit score, follow these links: TransUnion and Equifax. However, these don't include your credit score. But you can keep track of your credit score with a credit monitoring program like Refresh offers. It allows you unlimited access to both your credit history and score, helps you guard against identity theft, and also gives you valuable insight with a detailed credit and debt analysis. You can find it here.

5. Your credit score has an impact on so many aspects of your life

Without decent credit, you might find yourself having trouble booking hotel rooms, renting a car, booking flights or even just taking business trips that will eventually be reimbursed. It affects your ability to buy a home, and it can also have an effect on your ability to rent a home. You can have trouble obtaining banking products you want, and you’ll find buying a car difficult. Credit seeps into so many areas of our lives that it is as important to talk about as our health, where we send our kids to school, or who we might vote for in an upcoming election. If you face your credit and get it under control working towards credit building, it will improve your life overall.

6. You will save money

Those with better credit get better interest rates, and you don’t get better credit by ignoring the topic of credit. As we covered yesterday, a lower interest rate on something as simple as a credit card can be the difference between six years to pay off a debt and 3 years, saving you thousands of dollars in interest.

Even if your credit is in bad shape now, it’s not that difficult to learn how to build your credit. You will never be able to learn how to build your credit though, if you don’t bring up the topic, look at your credit report and clean it up as best you can.

The bottom line is that if you take control of your credit and learn how to build your credit, you’ll take control of your life. It really makes all the difference in the world.