I have a column planned on the most important numbers in assessing your financial health. Sneak preview: One of them will be your credit score.
Most people know their credit score determines whether they will be able to get a mortgage or a car loan, and at what interest rate. But property insurers may use these scores to set premiums, employers may consult them in assess job applicants and landlords may use them to select tenants.
Your credit score is your history of paying your debts, compressed into a single number. As you’ll see below, there are quite a few places where you can view your credit score at no cost.
But understanding your score is another matter. These numbers are based on complex algorithms that reward certain behaviours and penalize others. Whether your score is good, bad or indifferent, it’s often hard to understand the rationale behind the number.
Globe personal finance editor Roma Luciw and I aim to help you better understand your credit score in a Season Two episode of our Stress Test podcast, which covers personal finance for Gen Z and millennials. You can help us – e-mail your questions about credit scores to rluciw@globandmail.com. Or send us a recording of you asking the question. Simply open the voice memo app on your phone, record your question and e-mail the file to Roma.
We’ll pick a bunch of them and get an expert on credit scores to provide answers.
Here are some of the questions I want to ask:
- Are the credit scores you can see for free from some financial websites the same ones that lenders, landlords and employers look at?
- Which debts and bills are factored into your credit score, and which are not (student loans, for example)?
- What’s the best thing a 20-something can do to build a strong credit score?
- What’s the best way to quickly turn around a weak credit score?
Need to find out your credit score quickly? Here are some no-cost options:
- Online banking: Banks and credit card issuers often provide free credit scores to clients via their websites or mobile apps.
- Online lenders: Borrowell and Mogo will show you a credit report if you sign up. You do not have to borrow money from them to get the information.
- Other options: The financial website Credit Karma offers free credit scores.
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Rob’s personal finance reading list
The Ford F-150 pickup and your retirement
An investment industry blogger wonders if our preference in vehicles is costing us money that would be better used in our retirement funds. He uses the F-150 pickup in the U.S. market as an example, but it applies equally well here.
Getting a raise? Here’s what to do with the money
What’s happening in the economy today does not auger well for pay increases. But let’s say you’re fortunate enough to get a raise. Answers here on how much of your extra pay you should spend on yourself and how much you should save. The point here is to avoid lifestyle creep, where your spending rises by the same amount as your raise.
The blue chip stock with the 8 per cent dividend yield
An investing newsletter takes a look at Enbridge Inc., a dividend-paying blue chip with a high dividend yield that really stands out in this era of low interest rates. High yields are a result of investors selling a stock (prices and yields move in opposite direction) and thus can be viewed as a sign of concern about a company.
Are women more financially fearful and risk averse?
The editor-in-chief of Golden Girl Finance says no: “It’s more likely girls and women have been actively discouraged from developing these skills so as not to disturb the status quo.” Read her well-argued call for women to “step up their financial power.”
Ask Rob
Q: We would like to know if there is more money going to pensioners during the second wave of coronavirus.
A: Nothing has been mentioned. Here’s a refresher on what the government offered seniors in the late spring. The payment was criticized at the time for including people who didn’t need the money.
Send us your money questions. Sorry we can’t answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
There’s a lot of speculation about whether inflation will be one of the lasting economic effects of the pandemic. Here’s a calculator that shows the long-term effect of inflation in Canada
The money-free zone
I caught this song on Spotify the other day and present it here as a nostalgic moment for my fellow late-gen baby boomers: Uncertain Smile by The The. A song I can picture myself grooving to on the Toronto radio station CFNY back in 1983. Probably on my Blaupunkt car stereo.
ICYMI
Here are some personal finance related Globe stories:
- Good news, mortgage shoppers: Rates are plumbing new lows. But will they stay there?
- Working or learning remotely? Tips for building a home office on a budget
- Investors are desperate for safe havens right now – but they come with their own flaws (for Globe Unlimited subscribers)
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: How to survive the gig economy • How to get out of debt • Is now the right time to buy a house? • Crisis-proof your finances • Does investing change during a pandemic? • Can you afford to live downtown? • The cost of kids • Should you move back in with your parents?
- ✔️ A 10-point pandemic personal finance checklist: Create a "wartime" family budget; stop worrying about bank deposits; clean out your big-bank savings account; get relief on car payments; get preapproved for a mortgage; WFH? Save $1,000 a month; save, save, save; build resilience by not anxiety-buying; consider the cost of mortgage deferrals; get ready for the second wave of financial distress.
- 📈 Investing: The case for a tight portfolio of big blue chips dividend stocks; robo-advisers beat human advisers (and they’re thriving), why online banks that are better than the branch; is it time to invest your 2020 TFSA; don’t get your mortgage at a bank; why it’s so hard to invest in preferred shares; stock up on stocks to retire early; and are you following the 10-year rule with your investments?
- 💰 Saving: Food waste is wasted money; why you might regret that SUV and find out if CAA is worth it; juice your PC Optimum points; how an ex-Bay Street lawyer got out of debt; blindly easy tweak to your retirement investments to survive economic downturn; should you buy that latte?
Rob Carrick