For some of you who were declined credit due to five or six credit cards you own, let it be a lesson to others. It’s not the number of credit cards and the amount of credit limit on them that ensures another approved credit. The reality is on the contrary. You say you have three other credit cards with high limits and you don’t owe them anything so why can’t you be approved for say, $10,000 to furnish your newly bought dwelling. The answer my friend is that you are considered a high risk in the creditor’s eyes; not to also mention that in the last three months you tried to apply for credit in other furniture companies.
I know this because I used to process credit card applications and had a number of customers opened their wallet to me with a grin on their face and say here pick one, they all have high credit limit. I’d say with a poker face (from experience) okay…then later on faced their angry face demanding to talk to the creditor or the manager because they have been declined credit.
Chose wisely when closing a couple of these credit cards though. Remember the saying, ‘the more the merrier’ ? It does not apply when it comes to credit cards.
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Sorry I meant that some stores online allow debit purchases!
peter:
Yes it can be difficult to do as they all seem to think that if you don’t have a credit card you’re “bad” or have “failed”.
The best so far (if it’s okay to plug here) is the bmo prepaid. It’s $10 a year, and will do anything you need it to do. There are some hoops to jump, and you do have to pay the card in person at many banks due to..sadly fraudsters, but it works like any other, and costs very little to maintain.
Don’t get the ones from stores that have activation fees etc., Get one that has your name on it, and is essentially a “debit” card of sorts.
With that in mind, it’s sad Canada is behind the 8ball on debt card use online etc., I’ve seen lots of online services in the states now accept purchases with debt.
Finally anyone who is saddened by their trip through a bad credit experience. Watch money as debt on google video, it’s about 40mins long…it explains where credit came from, how it’s given out, and the oddities of it all. While it can’t excuse being flippant with money, it does make you feel better when you see how CLAZY the process actually is!
Cheers and good luck!
Dave….
Just wanted to ask …I am about to start a debt plan but am concerned because with out a credit card you can not rent a hotel room, rent a car, or even rent a carpet cleaner at the grocery store let alone be able to order anything over the phone or net ( yes i read your line about pre-paid cards) so for me it will be a real challenge and find it hard to believe your account.
Life without credit is not that bad. My brother in law has no credit cards and he saves money paying in cash in some Asian restaurants and stores, renovators and even small electronic, building supplies, etc. stores.
Yes, I can identify with your fridge dilemma.
Right on David – I do request for lower credit limits on my two credit cards whenever they raise the limit.
Mandy, good for you first for looking at getting into the housing market and secondly for looking at the importance of limiting the number of credit cards before doing so. I suggest cutting up the third card and asking for it to be closed since you don’t use it. Then when you are looking at getting a mortgage emphasize to the lender that you did this to show good faith and a reasonable limit to the amount of credit you have. Basically you should not have to wait after closing down the account since you are only closing down one and not several. You should be able to explain to the mortgage lender your reason for doing so. Good Luck!
Rob you make a good point, a lot of people do manage well without credit and your comment about freedom is so true. We hear that from Credit Canada clients all the time, they say being debt free and not using plastic is a very liberating experience!
Thanks Mandy. It’s excellent that you’re paying your credit card balances at the end of the month.
I am guessing you want to keep your 3rd credit card (with very little limit -maybe $1,000?) for the ‘just in case’ situation?. Yes, I would reduce my credit limits before checking out the market for a mortgage and wait after three months have passed before doing so as banks, etc. send in their reports to Equifax every three months.
Good luck in your mortgage hunting…
It’s a very good tip and couldn’t be timelier for me personally. I’m currently considering to check the market for mortgage and have three credit cards two of them which I’m using on a regular basis have high limits but I’m paying the balances at the end of the month. The third one I’m not even using but got very little limit. Should I reduce my credit limits before I go and look for mortgage? How long do I need to wait after doing that to make sure the changes are reflected on my credit report?
Thanks,
After experiencing a “falling down” and loosing the credit cards and going through a proposal, I have to say…life without credit really isn’t that bad.
Sure, one day it will be rebuilt, but I still have a home and mortgage, and you know what…I’m fine without credit cards. There are banks that allow for pre-paid cards that let you do the online things and book travel etc.,
This means everything I do or buy…is within my means, and makes it impossible to get into trouble again during a job loss etc.,
My life is not that dramatic to need a pool of credit to dip into to fix anything. If my fridge broke tomorrow, I’d simply have to make do for one week while I waited for pay day. And out I would go, with that cash in hand and buy the fridge.
You’d be surprised how much cash you have when you don’t have any credit cards. Sure, you do have to wait a bit sometimes to do something…but it’s a freedom I’ve never had before, and it’s wonderful!
If and when I do return to the realm of plastic, the limit won’t go past anything I cannot pay from disposable income in one month. A key thing to remember? When they keep raising that limit, call them back and demand they pull it back.
Your average Canadian middle class doesn’t need a 10k credit card for emergencies.
Well done and well said.
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