The Better Business Bureau of Vancouver Island is reminding consumers to take the time to become credit savvy before embarking on home improvement renovations.
“We get a number of calls this time of year from consumers, who are eager to start a renovation or home improvement project, that misunderstand how their use of credit has negatively impacted their credit rating,” said Rosalind Scott, president and CEO of the local BBB.
“These consumers are then very upset with the bank when they find out that they are not eligible for home improvement loans or credit cards, despite the fact that they think they have a good credit history.”
The real problem often begins long before the consumer heads to the bank for a loan. It usually begins earlier in the year (or even the year before), when the consumer took advantage of “in-store discounts” related to the opening of an account associated with store’s credit card program.
“What consumer’s don’t often realize is that those ‘buy now, pay later programs,’ and those ‘get a discount by opening a store credit card’ opportunities, are actual financial activities that impact your credit history and your credit rating,” said Scott.
“Even if you never use the program or card again, the fact that you opened it goes on your credit report and has the potential to impact your access to additional credit or loans in the future.”
Many consumers think that by cutting up a credit card that the account then no longer exists. This of course is not the case. To cancel a credit card there is a very particular set of steps that you must take. And just because you cancel a credit card it does not mean that the payment information related to the card comes off your credit report immediately.
Closed credit accounts, with zero balance and no associated negative information, will remain on your credit report for 10 years from the date the account was closed.
For more helpful consumer tips, please go online to: bbb.org/Vancouver-island.