Canada’s credit score obsession is leading people to make bad financial decisions
Often Canadians feel a false sense of security when they find out they have a higher credit score. A higher score can lead to more borrowing, creating a cycle of debt that the borrower can never get out of. The largest element of your credit score is your payment history. Paying the minimal amount on time will increase your score, while paying the balance in full and making extra payments will not improve your score. Utilizing more credit than you need to can also increase your score, making you feel safe to borrow more. Before borrowing, always consider your finances and not your score.
- Too much information about a persons credit score is available online and that information has led to unwise actions related to credit.
- Even someone with a high credit score can end up becoming insolvent.
- Credit scores reward indebtedness, because credit scores are a product for the banks.
“Trying to game the system by tailoring your borrowing habits to what you think is the right credit score ‘formula’ can actually improve your credit score while making you financially worse off.”
Read more: https://www.moneysense.ca/save/credit-score-obsession/