BAD CREDIT = @#%^!?!
It was my dream: One of the first things that showed me how cool it was to go to university was my first store credit card. I picked up an application that allowed me to apply to The Bay, Zellers, Canadian Tire and Eatons. I applied for them all. Then I spent and spent. Because I was waiting for my second OSAP installment, I ignored for a few months paying the minimum amount required. As long as I paid them later, I thought, everything would be fine. . . . It became my nightmare: Three years later, I applied for a MasterCard and they told me that I had a bad credit history. They explained that, although I had paid every card in full, I had missed too many payments. I tried to apply for a credit card again in my fourth year and the answer was still no. Without a credit card, I could not rent a car or book tickets in advance and, with a poor credit history, I could not get a personal loan. It took me almost seven years to build up a credit rating good enough for a bank credit card and a loan. How did I get a good credit rating? you may ask. It’s so easy and yet so hard.

GOOD CREDIT = !!! :-)
Well, I hope you haven’t missed any of those monthly minimum payments on your credit card. Or have you? If you don’t know who I am, I am the guy with the bad credit card rating. Here is how I improved my rating and now have an impeccable standing with my credit agency. Imagine a Sunday morning. Not any Sunday morning but a cold winter one with -15ºC showing on the thermometer. I get out of bed, shower, dress up, and walk for 15 minutes to the subway (sorry, no TTC bus service on Sunday). 30 minutes later and guess where I am? The Bay at Yonge and Bloor. And they aren’t even open yet. Why did I ever want to get to The Bay that badly, you ask? To pay! To pay my bill! I don’t want to miss the required payment and it’s due today! I kept making those payments on time for almost five years. No, I never missed a payment. I did not pay the full amount, but I made sure that I paid the monthly minimum. And now, I am the proud owner of a MasterCard. . . .Cool! But there’s always a catch. Now that I have an excellent credit rating, I am offered higher spending limits. They called me last year and offered me a $2,500 limit on my credit card. My advice to you is . . . say “No”. Unless you absolutely need it right away. Why? I’ll tell you why in the next issue of Money Matter$. For now, watch out for that Christmas spending. . . .

Good credit = Higher credit limit = Debt Management
Is there a catch with a credit limit increase? Usually there is no catch, only more debt potential. Yes, the higher the limit, the higher debt potential you are exposing yourself to. I thought that I could never charge my card to the limit. Well, I did. And now I am having difficulty paying my credit card balance again. What are my options? Not many. I can pay an annual fee to switch to a lower interest bearing card, but the rate is still high. Then I heard about line-of-credit. The bank will give me a line of credit of, lets say, $5,000 for me to pay off my cards. The interest rate for a line of credit is usually around Prime+2-5%. This translated to about 8.5% when I did it. That was much less than the interest charge on my credit cards. And I only pay interest on the amount I have owing.There is no grace period but I think I can live with that. And this option was only available because I had a good credit rating! So, during the past 10 years, I’ve managed to destroy my credit rating, rebuild it, and now still have a high credit card debt. I will probably be in debt for the rest of my life, just like thousands of Canadians, but at least this time it’s under control. I now have 2 Visa cards (yes, two), a MasterCard, an American Express card, a Bay card, an Eatons card . . .