Murray Callaghan, Callaghan Wealth Management
T’was a time when you needed to go looking to build a credit rating. Today, they’ve likely found, reviewed and approved you without you ever asking.
Your friendly financier is a cunning fox with the aim of a long-term relationship with you. Show a little promise early on (like making payments on time) and they keep upping your borrowing capacity rather than lose you to their competition.
It helps to have borrowed some and paid it back. I once had a client in his early 80s who had difficulty obtaining a credit card. Having paid cash for most everything, owning a home and with $500K in the bank, he was being evaluated to make sure he was worthy.
In the right hands, credit is a very good thing. Governments use it to build long-term projects, businesses to expand and consumers to purchase homes. For the new or the undisciplined it can be a ticking time bomb from which recovery is difficult.
A credit card and a pre-approved line of credit are necessities in today’s world but get familiar with all of the benefits, responsibilities and fine print. The biggest beneficiaries understand them and likely are off on a winter vacation partially or fully-paid by reward programs.
As with all knowledge gained from actual experience, I make a point of paying ours down as we go, making the final payment when the electronic statement becomes available. Easier to get ahead of the curve and it keeps track of what’s mine and what’s owed.
As a wise sage once told me, “better to have it and not need it than need it and not have it”.
Murray Callaghan is a Certified Financial Planner with 15 years’ industry experience. He partners with external portfolio managers and insurance providers. Reach him at 250.286.9968 or visit his website at www.crwealthmanagement.ca.