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News stats..Higher debt, but lower defaults

debt aminationSaw this article today about higher consumer debt levels BUT lower defaults.   Equifax Canada is quoted as saying that consumer debt rose by 7.2% in  the second quarter 2014 to $1.45 trillion ,compared with $1.35 trillion from a year ago. This includes credit cards, loans, lines of credits and mortgages.

The average Canadian now has $20,759 in personal debt, excluding mortgages.   That’s a 1.5% increase since last year.   So that means mortgage debt has risen by around 7%.    Here’s a heads up… you will see and hear articles sounding the panic alarm… again.

Well, before we hit that panic button, there was one more stat that we should pay attention to.   DEFAULTS.   Defaults are at their lowest level since 2008.  If higher consumer debt levels and lower defaults sound strange to you, it shouldn’t.    I’ll explain… Continue reading “News stats..Higher debt, but lower defaults”

Personal Debt level concerns are overblown according to Equifax stats.

Equifaxdebt amination So here we go again.. More stats that show our personal debt levels aren’t out of control… That’s right, I said ‘aren’t’ out of control.  Equifax Canada says our defaults are at record low levels and we are paying off our debts faster.   This doesn’t come as any surprise to me.   Anyone that’s followed my posts knows that I have questioned all the popular articles telling us we are not managing our debts responsibly.

You’ve seen the reports… ‘Personal debts at record high levels’…..’Personal Debt crisis’.     We’ve been hammered with the same headlines for the past few years.  I just wasn’t seeing this with my readers or my clients… I kept seeing consumers wanting  to take advantage of these record low interest rates to invest or improve their homes (why is that a bad thing?).   That’s not bad debt in my opinion… that’s good debt.. And now we have some stats to back up what I have experienced. Continue reading “Personal Debt level concerns are overblown according to Equifax stats.”

How do lenders measure your credit worthiness?

Most of us understand that establishing and maintaining good credit is important.  Beacon scores or Fico scores, as they are sometimes referred to, are generated based on many factors but the main things that influence your score are:

-number of years you have had credit (the longer the better).

-your repayment history (missing payments will hurt your score).

-the type of credit you have opened (term loan, revolving line of credit, credit card or finance company purchases).

-your balance in proportion to your available limit (don’t go over 70% of your limit).

-credit utilization overall (how much of your available credit have you used up).

-number of recent inquiries on your credit (make sure you don’t apply for too much credit).

-inquiries by finance companies (hard and soft inquiries….there is a difference).

-change in address (if you move frequently, this can affect your score negatively).

All these things affect your credit score.  Wondering what a good credit score is?  A great score is anything above 700.  Most mortgage lenders would agree and this would qualify you for any mortgage product   (recently, one lender came out with a 720 minimum score for a certain product).   Some mortgage products require a 680 minimum score and generally speaking, 650 and above is good…  620 and below is weak…and 580 and below is poor.

You can obtain your own personal credit report from Equifax to find out what your score is and it does not count against you… it will not show up as an inquiry on your report…there is a small cost for this….  let me know if you need more info…

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