Consultations available by video and phone with electronic signatures.

Ask the experts

Ask the Experts- June 2020

Many don’t feel comfortable talking about money. In our society, a lot of people feel that discussing finances, budgets, and salaries is only something you do with very close family members. In addition, some people don’t talk about money because they’re worried about making a mistake or saying something wrong.

However, talking about money is important. When you discuss money, you learn strategies that you didn’t previously know, you understand new aspects of money management, and you better prepare yourself to improve your financial life.

That’s why, every month, our experts answer some of the money questions we receive.

If you have a question for our team, ask us online on FacebookTwitter or through our website.

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

I was laid off. What does this mean for my credit score?

Sorry to hear that you have been laid off. However, your employment status doesn’t directly affect your credit rating. That’s because your job isn’t something that the credit bureaus track. Your credit report contains information on every loan you have taken out in the last six years. This includes your balances on each account, how long you have had each account, your payment history, and more. If you’ve been laid off, but you can keep up with your payments, your credit score won’t be affected.

Of course, not having a steady income could very easily affect whether or not you can pay your bills. If you end up missing payments, this will negatively affect your credit rating. The same is true is if you start maxing out your credit cards to pay your bills or getting several new credit cards to make ends meet. The credit bureaus keep track of what percentage of your available credit is being used as well as how many new accounts you open.

To avoid having your unemployment situation damage your credit, make sure to make at least the minimum payment on all your accounts and modify your budget so you don’t overspend and take on new debt. You may even want to contact your creditors, explain your situation, and ask if there is anything they can do. If you have a good credit history, they may be wiling to reduce the amount you pay in interest to make your monthly payments smaller.

Also, while getting laid off in itself doesn’t hurt your credit score, not having an income can certainly make it more difficult to get a loan. In addition to checking your credit report, many lenders also ask for details on your income. This means you could have trouble getting some loans even if your credit isn’t affected.

I’m really confused by the CERB and other COVID-19 relief programs. Can you help me understand them?

First of all, you’re not alone in being confused. While the government relief programs certainly can help many Canadians, it is often confusing and difficult to figure out which program you qualify for (if any). There are a lot of conditions in place and many different programs aimed at many different situations, and this can make it difficult to know which program you should apply for (and even where and when you should apply.)

This confusion is why we have created an infographic that simplifies and explains the various financial relief options available to workers affected by COVID-19. It can help you figure out which programs you may qualify for. You can download the infographic here.

More information can be found at our COVID-19 resource centre.

Also, know that there is little to no verification done by the Canada Emergency Response Benefit (CERB) application process. This means that those who are not entitled to receive the benefit could still complete the application and receive the payments. If this happens, you may be required to pay back the benefits later along with potentially heavy penalties and interest.

It’s also important to remember that that the CERB is a taxable benefit. This means that no deductions are taken for income tax at the source. You will need to declare this benefit on your income tax return for 2020 and you could have to pay taxes on the income. Since this is the case, it’s important to ensure you hold back some money to pay these taxes when the time comes.

Finally, you’ll also need to be on the lookout for scams. Since many people are anxious and confused by the economic situation surrounding COVID-19, there have been many scams floating around that try to take advantage of these unprecedented times. If you receive any information by phone, email, or text that asks for personal or financial information, contact the agency or financial institution directly to verify the message. Don’t click on a “contact us” link in a suspicious email or text. Look up the correct contact information yourself to make sure you’re calling or emailing the right organization.