Hey footloose and averagejoe,

Thanks for the advice. This week I'll apply for one and hopefully put this whole mess behind me.

Anthony

Obtaining a credit card, whether it be secured or unsecured, will have no effect on your credit score. Once an application is made for a credit card, the credit grantor will pull a credit report on you. In a worst case scenario, that inquiry may drop your current credit score from 3 - 5 points. But your credit score will fully recover to its original level within 4 - 6 months. Remember, hard inquiries ( i.e. those from lenders and credit grantors ) only affect your credit score for the first 12 months. Any hard inquiries that appear after 12 months have no effect on your credit score. They only appear for the sole purpose of informing future readers of your credit report to whom you have applied for credit.

Any offer for a "pre-approved " credit card is only a marketing gimmick. Credit Card companies purchase mailing lists from various sources. If a credit card company wishes to do a mailing campaign that targets individuals whose income ranges from say, $40,000 to $75,000, or individuals whose credit scores range from say, 700 to 760, they will purchase these lists and send out advertisements to these individuals claiming that they have been "pre-approved" for a credit card. It means nothing. Once an application has been received by the credit card company, the individual is subject to the same checks as everyone else. I have seen and heard many times where an individual has received a "pre-approved" credit card offer only to be declined after the application has been submitted and reviewed.

If you currently have no credit cards, I strongly urge you to apply for an unsecured credit card. You have enough credit history to warrant the issuing of an unsecured credit card to you. Always put some charge on the card every month, even if it is only $10 for groceries and then pay it off by the due date. This way, you will be helping to build your credit score. Fair Isaac Corporation developer of the FICO score has stated many times that a good mix of credit ( i.e. instalment and revolving credit ) will help to build your credit score. In fact, they give it a weight of 10% in the overall determination of your credit score. If in the off-chance that you are declined for an unsecured credit card, definitely apply for a secured credit card. You are guaranteed a secured credit card providing you make the required deposit. Capital One offers a secured credit card for as little as a $75 deposit for a $300 limit.

Good Luck Anthony. I hope things go well for you. .

I would get a regular credit card if you can. If you do apply for a secure credit make sure it’s from one of the major banks. The major banks will refund your security deposit after one or two years of good standing and will continue to let you use your card without closing your account.

Thanks footloose, I understand now how the beacon may top ot at 900 and FICO is only 850.

Now, The bad debt I had was from more than 4 years ago (2006) and both were paid (2007) , nothing else on the report shows any late payments, and there really shouldn't be any outstanding balances or payment that I have missed in the last 4 years . However I have never taken out any revolving accounts since those were cancelled. I have been offer the "pre-approved" gold card , which is actually from the credit grantor that cancelled my previous derogatory account, but never took the offer. I thought it would help my score not to take it, since I have 2 installment account (student loans) both I1s and up to date (one $6000 balance and $4000 the other) and a recent I1 account from Mercedes Financial for a car lease that is closed as PAID. (Bought the car at the end of lease) It sounds like I should get a credit card and keep it tip top for 2 years so that I have some recent revolving history? To try and get rid of this; (since there is nothing negative on my report in the last 2 years)

Number of national card trades bad debt in last 6 months.
Worst current rating for revolving trades in last 12 months.
Number of trades bed debt in last 24 months.

Should I get a secured credit card or a regular one?

Thanks.

Anthony

As I mentioned in a previous blog, the only place in Canada that you can obtain what is known as a FICO score is from Equifax Canada Inc. Equifax licenses the FICO algorithm from Fair Isaac Corporation, located in the U.S., and with a minor modification, produces what is commonly referred to as a FICO score. Although both Equifax and the credit industry refer to it as a FICO score, technically speaking, it is a "Beacon" score. Because of the minor modification, the score has a range between 300 - 900, but I have never seen or heard of anyone receiving a score greater than 850. A true FICO score has a range between 300 - 850 and can only be obtained in the U.S. from myFICO.com which licenses the algorithm from Fair Isaac Corporation.

For more information on the true FICO score

http://www.myfico.com/Downloads/Files/myFICO_UYFS_Booklet.pdf

.

Hi Anthony,

It's really difficult to tell what it could be without actually seeing your credit report. Normally what this would mean is that there is some sort of a bad debt being reported (could be a missed payment, if there is an ammount outstanding on the cards that were cancelled, or any other derogatory report showing on your bureau. Look over your credit report if you see anything derogatory in the last couple years that is probably it.

With that being said the more time that has passed since a bad debt/missed payment the smaller effect this will have on your overall credit rating (as long as they are paid now). If you had a bad debt from 2 years that was paid off and you have 1 or 2 positive lines (reports) since then most credit grantor's won't be too concerned about it, they may ask for an explanation in which case i would just be honest and explain the circumstances. From a lender's perspective, most of them prefer to see at a min 1 (preferably 2) active trade lines maintained for min 1-2 years @ R1 meaning paid as agreed so if you don't have any credit cards right now, it would be a good idea to get one and your exactly correct, keeping it at less than 30% of the balance and paying it off regularly will have the best impact on your credit rating.

Any other questsions don't hesitate to let me know (either via a post or e-mail.

Jeff Aikman
jaikman@dominionlending.ca
www.jeffreyaikman.ca

Hey Everyone,

Thanks for all the replys. The report is an Equifax report, however I didn't pull it online. It was a free consumer discloser report that I got in the mail and added the credit score for $9.95 to it.

Jeff, you are correct I had some late payments (3) on 2 cards up to 90 days overdue, coming up on 5 years ago. The cards are still reported on the report as R1 Paid As Agreed, but they were both cancelled by credit grantor, one with a derogatory rating.

What I didn't understand was the part about the "trades bad debt" but also stating them in last 6 months , last 12 months and last 24 months. Does that mean I have something reporting a missed payment(s) in the last 2 years?? I hope not because they should be up to date. If it's still the missed payments I had almost 5 years being reported, ok. (Just the thing about the last 2 years kinda freaked me out) Do you think that is the case? Could this be because I haven't taken out a new credit card since they were cancelled? Could I increase my "current rating for revolving trades" by getting a new card, making sure it was paid up always and never above 20-30% of the limit?

Number of national card trades bad debt in last 6 months.
Worst current rating for revolving trades in last 12 months.
Number of trades bed debt in last 24 months.

Thanks for everyone's help

Anthony

I am a licensed Mortgage Agent in Ontario and am registered with Equifax and thus make a lot of credit inquiries in the process of doing mortgage applications.

Both equifax and transunion scores max out at 900 (although I have never personally seen anyone at 900 as no matter how good your credit it can almost always be better). Transunion and Equifax will normally differ slightly as the formulas that each one uses may have some very small differences (although they should be very close to one another), also some debtors may only report to one or the other which can have an impact on your overall score.

Anthony, 707 is a very respectible credit score and will be sufficient for most credit card companies as well as mortgage lendrs. Equifax will always list ways your score can approve (I have seen this even on reports that are above 800), whenever you see the term "trades" that is industry talk for lines or reports to your bureau. I would need to see it to say for certain exactly what they mean but my guess is that you may have had 1 or 2 late payments reported by credit card companies.

Any other questions, feel free to get in touch.

Jeff Aikman, Mortgage Agent
Dominion Lending Centres Mortgage Plus
647-216-2654
jaikman@dominionlending.ca
[url]www.jeffreyaikman[/url]

I recently pulled my credit score from Equifax and Tran’s union website. The chart at Equifax shows the highest they go is 862 and at Trans union 900.

From which website did you pull this credit report? You obviously did not get it from Equifax Canada Inc. because they license their scores from Fair Isaac Corporation in the U.S. and with a minor modification, their score in Canada is known as a "Beacon" score which everyone refers to as a FICO score. All FICO scores have a range from 300 to 850 and NOT 900. Therefore, what you got was what is known as a FAKO score, not a FICO score. There are dozens of websites masquerading as a FICO website when in fact they have no license agreement from Fair Isaac Corporation. In Canada, the only website that you can obtain a true FICO score is from Equifax Canada Inc. You cannot obtain a FICO score from TransUnion of Canada because they do not have a license agreement with Fair Isaac Corporation. They have developed their own scoring model and it is called an "Empirica" score.

Also, the comments shown on your credit report are not typical comments that I have seen on credit reports issued by Equifax Canada Inc. Check out the website from where you obtained your credit report and score. The website from where you obtained your credit report and score may have indicated that it is an Equifax report and score but in reality, that is false and deceptive advertising. If the website indicated that the credit score goes to 900, that is the "tipoff" that this is a phoney credit report and score and all they want is your money.