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Ask the Experts: December 2018

Unfortunately, money, budgets, and finances are topics that many people do not feel comfortable discussing. There are several reasons why. Some people feel like it’s not polite to talk about money. Others feel embarrassed by what they don’t know, so they don’t say anything. Some people feel like these are private issues that shouldn’t be talked about.

However, when you don’t discuss money and when you don’t ask the questions you may have, the possibility of believing misinformation exists. Plus, talking about money and budgets can help you come up with strategies for managing your money and make better financial choices.

That’s why our team regularly answers financial questions online. We want to help people understand budgets and money management so they can put themselves in stronger financial positions. If you have a question for us, ask us online on Facebook, Twitter or through our website.

The questions here have been condensed or rewritten for clarity and simplicity.

Will holding a joint bank account with someone negatively affect my credit rating?

There tends to be a lot of misinformation about how joint assets affect someone’s credit rating. The reality is that having a joint a joint bank account with someone likely won’t affect your credit rating on its own, even if the person you share the account with has bad credit.

However, this is only true if the account remains in good standing. If the person sharing the account writes cheques that put the account into overdraft, there could be an issue. Not only will you incur additional charges and fees, but frequent overdrafts could lead to the bank reporting these issues to the credit bureaus, which will affect your credit rating.

I have credit card debt and a student loan. Which should I repay first?

Every financial situation is unique and there are no financial answers that will apply to all people at all times. However, in general, when you have several debts, it’s a good idea to focus on the debt that has the highest interest rate. In most cases, this will be credit card debt. You’ll want to focus on this debt since it likely costs you the most each month. Continuing to carry credit card debt can get very expensive, so it’s a good idea to try to pay off your credit cards as quickly as you can.

Once your credit card debt has been repaid, you’ll want to focus on the student loan.

Remember, even though you’re putting most of your efforts into paying off debt right now, it’s still a good idea to try and put something aside each month for emergencies. Even if you can only manage a few dollars a month, having an emergency fund will help you avoid debt troubles in the future.

I’ve heard that having too much available credit can be a bad thing for my credit rating. How much is too much credit to have available?

There are a many different factors that go into the calculation of your credit score. One of the main ones is your credit history. This means how often you make payments on your debt as well as how long you have had a credit history. The length of your credit history matters. For instance, if you have had a credit card for ten years and never missed a payment, this helps your credit score more than a credit card you’ve had for one year even if you have also not missed any payments on this card.

That said, it is possible that lenders may not want to lend to someone who has a large amount of available credit. The main reason is that the more credit you have, the greater the temptation to use it. The way some lenders see it is that, if you have the ability to max yourself out because you have a lot of credit, you’ll be more likely to do it. These lenders avoid lending to people who they believe have “too much” available credit. How much is too much? This depends on your personal financial situation.

However, before you close any credit cards, remember that the length of your credit history matters. If you a close a card that you’ve had for a long time and one that you have a successful history with, this card will disappear from your credit report, which could hurt your score even more than if you had kept the card open.