by François Noël, MBA, CIRP, LIT
August 16, 2017
Credit is a double-edged sword. You need to know how to use it carefully.
Credit is a practical means by which to purchase a house or car, help out in emergency situations, and purchase things online as well as everyday items without having to carry cash. But if your monthly payments get too high, you may end up having a hard time paying for basic things such as rent and groceries.
If you need to borrow money, limit yourself to what you really need, even if your financial institution offers you more at an attractive rate. When you have access to more credit than you need, it’s easy to get used to living above your means.
To convince financial institutions that you are willing and able to pay back your credit, you need to earn their trust. Financial institutions usually ask three questions before lending money:
- Are you able to pay it back?
- Do you have a steady job?
- What is your credit rating?
- Three years after the end of your payments for consumer proposals.
- Six years as of your discharge in the case of a first bankruptcy.
- Fourteen years as of your discharge in the case of a second bankruptcy.
- You must have a stable place of residence.
- Have a stable employment.
- Make a budget and stick to it.
- Open a savings account and save regularly.
- Once you are discharged, request a $500<span style="text-decoration:line-through;">$</span> credit card by offering a $500<span style="text-decoration:line-through;">$ </span> But avoid requesting more than one credit card, as doing so will be an area of concern for future lenders
- Never max out your credit card. You need to be able to pay your entire balance every month.
- Borrow a small amount by pledging saved money as security