Protect Your Credit Score

We spend a majority of our youth in school where we strive to get good grades. Good grades are important since they can lead to acceptance to a prestigious university or college. Also, with good enough grades it can lead to scholarships and one day graduate school. However in the "real world" educational success doesn't necessarily equate to financial intelligence or the guarantee of greater earning power. After all some of the wealthiest people in the world didn't even get their university degree (Bill Gates, Mike Lazaridis, Richard Branson and John D. Rockefeller).

This isn't a message against higher education. Instead, it's a message of the importance of your credit rating. When you approach a bank to get a mortgage for a home, they'll ask to look at your financial report card and much of it is contained in your credit score. No banker will care how you did in Econ 101 or Introduction to Basket Weaving. They will try to gauge your reliability for paying your bills on time and whether or not it will be risky to lend you a large amount of money.

That being said what's the best way to protect your credit score? Pay your bills on time! Ideally you would pay your credit card bills in full every month, but if you can't, at least make the minimum payments. Your credit score gets dinged when you miss a payment. Also, applying for several credit cards will ding your credit score. When you're automatically approved for a card that's fine, your score can be effected when you're actively searching for credit.

Canadian credit scores vary between 300 to 900. 300 being dreadful and 900 being the best possible score. Having a high score is like having an excellent bargaining chip during mortgage rate negotiations. People with high scores can negotiate a lower interest rate and save tons in the process. So be sure to protect yours!

Here's a video for students who want to develop a good credit rating. Also included are frequently asked questions from student investors: