Will you get credit?

Credit Worthiness – The 3 C’s Prior to granting credit, a lender looks at the potential borrower’s credit worthiness – a person’s ability to take on and repay debt Three C’s of credit are the qualities a lender considers when making a decision about whether to grant credit Character – borrower’s willingness, reliability, and trustworthiness to make a loan repayment. A lender needs to assess the character of the borrower to determine if the individual will repay the debt. Capacity – borrower’s ability to make payments on time and to pay the debt when it is due. Assessment of capacity by the lender determines if the individual can repay the debt. Capital – the value of the borrower’s assets that could be used to repay debts. The lender makes an assessment of capital to know what the borrower has of value that could be sold if the individual does not repay the debt.

Your Credit Rating Credit Rating – indication of the level of risk that a consumer, business, or government will pose if credit is granted Credit Bureau – a business that gathers credit information on borrowers and then sells it to credit grantors and lenders Information is collected for a period of seven years (after which the information is removed from your record) Information is compiled into a single credit score between 300 and 900 – the higher your score, the better your credit rating Two national credit bureaus in Canada – Equifax & TransUnion Recommended that you review your credit report annually Everyone can order a free copy of their credit report Request must be made in writing Copy will be delivered by mail Bureaus will also give you instant online access – for a fee!

Building your Credit History Students usually do not have any credit history, which makes it difficult to receive a loan for education, for transportation or to start a business Ways for students to build their credit rating include: having bills in their name and paying them off by the due date (e.g., cell phone) having someone, such as a family member or close friend with a good credit rating, co-sign a loan buying something on credit and paying it off before interest is charged getting and keeping a job obtaining good marks and attending school