You can use your home equity to pay for education. With the skyrocketing cost of post-secondary education and higher incomes that don't qualify for special grants and student loans, this is a popular solution. You can also use your home equity to open an RESP and make before tax contributions.
If you are borrowing for big-ticket items, your credit rating may come into play, and it pays to know where you stand.
Know Your Credit Score
When you apply for a loan, your financial institutions will inquire with one of them to look at your credit score. A high score (you want to be above 720) means you will qualify for the lowest interest rates.
How to Optimize Your Score and Avoid Raising Red Flags
- Pay off your debts in a timely and predictable manner. If they are too high, or take to long to get paid off, this could negatively impact your score.
- Keep a long track record with at least one financial institution. For this reason, it makes sense to hang on to your oldest credit card, even if you rarely use it.
- Don't miss loan payments, or the minimum payment on your credit card.
- Stability is key. Avoid frequent shuffling of accounts, or making frequent applications for credit.
- Bankruptcy, filing a consumer proposal, or receiving credit counseling cause the most damage, and it can take 6 or 7 years for these to come off your record.
Credit Bureau Organizations to Contact
Your score is calculated by 3 independent organizations that monitor your borrowing habits.
- Equifax Canada - 1.800.465.7166 - www.equifax.ca
- TransUnion Canada - 1.866.525.0262 - www.transunion.ca
(For Quebec residents, 1-877-713-3393) - Northern Credit Bureaus Inc. - 1-800-646-5876
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