credit-card

There are two things I don’t like about Air Canada: one, they sell their food to passengers; and two, they don’t accept cash payments onboard.

I still dread that awkward moment two years ago when the stewardess asked me, at 30,000 feet, “We don’t accept cash, do you have a credit card?”. I swear the entire cabin heard my negative reply. And I’m sure several of those that heard my reply jumped into conclusions that I either have poor credit or worse, am a discharged bankrupt.

In North America and most of the first world, credit is a privilege bestowed on individuals who have, in the financial institution’s estimation, the capability and intention of repaying debt. These capability and intention are often gauged using the credit score provided by credit bureaus. The higher a person’s credit score, the higher his credit worthiness, which means he has access to more credit. On the other hand, a person who is a discharged bankrupt or who is currently in a consumer proposal, has very limited chances of being granted credit.

It’s quite ironic that the person who has access to credit usually doesn’t use it and the one who needs it cannot access it.

After being out of Canada for seven years I came back and checked my credit score – the credit bureaus expunge records every six years so all my old records were gone and I had a clean slate.

Barely one month into a full time job I applied for a credit card with a provider known to help those who have no or bad credit history. A credit card is a necessity here. Imagine purchasing an LV bag for $3,050 and paying in $20 bills. Doable, yes, but the norm is you pull out your plastic, swipe or tap, and you’re done.

I had to build credit again and the sooner I started the better off I would be. I got a card with $500 as credit limit. I was grateful the card provider didn’t require a security deposit.

Fast forward two years I now have credit cards from three major banking institutions with credit limits I can’t afford to use.

Two strategies helped me get back on track with my credit. First, I always paid the minimum payment required on time. It’s better to pay the balance in full every month if you can afford it. Second, I ensured that my credit utilization is always within 30% or less of my revolving credit. This is the amount of credit you use versus what’s available to you. So if you had $10,000 credit, you shouldn’t use more than $3,000. If you maintain these two strategies, within a year or two your credit score will improve and credit offers will start coming your way.

I can now comfortably travel on Air Canada and proudly pay for my onboard purchases with any one of my three credit cards. In two years my situation has turned around for good. The challenge is to continue my responsible use of credit. I hope I don’t get depressed and use shopping as therapy. With credit at my fingertips, I avoid browsing LV and Tag Heuer websites for fear I might do an impulsive purchase. And get stuck paying for credit for a very long time.

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