Ep. 32 | How to Build Credit in Canada: Equifax and TransUnion Guide

In this episode, Tré breaks down how credit scores work in Canada using best practices given directly from Equifax and TransUnion. Using information straight from Equifax and TransUnion, he explains exactly what goes into your score and how to build it the right way.

Whether you’re starting out or trying to repair your credit, this episode will help you make smarter decisions that lenders actually care about.

What you'll learn:

• The five real factors that impact your credit score (and what doesn’t)
• How to use credit without damaging your score
• What credit utilization actually means—and why 30% matters
• Why obsessing over your score past 750 is a waste of time
• How to build credit early, safely, and effectively
• When giving money can hurt your financial stability

Share this with someone building credit—or struggling with it. And don’t forget to follow or review the show.

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Transcript

tre 0:00

Hello, and welcome to the Plain English Finance Podcast, the podcast dedicated to helping you make smarter financial decisions. I'm your host, Tre Bynoe, certified financial planner and chartered investment manager. I'm a financial planner with TCU Wealth Management and Aviso Wealth. For more details or to send in your questions, check out the show notes at trebyoe.ca/podcast. And if you wanna learn more about me, start with episodes one and two. So welcome to the 32nd episode. So this episode is on credit scores.

sierra 0:29

Yay.

tre 0:29

I hear so much garbage from lots of different people. Very well meaning on building credit, how they calculate it, all of that stuff.

sierra 0:41

Yep.

tre 0:42

So let's actually look at it. Let's,

sierra 0:44

I've heard as soon as you buy something on your credit card, you have to go in and pay it immediately. That's good for your credit score. I've heard you should max out your card. That's good for your credit score. Yeah.

tre 0:55

Yeah. If you don't leave anything on there, that's not good. It needs to, you need to leave, you need to leave something owing on the credit card. Yeah. Yeah. I've heard lots of

sierra 1:05

Random

tre 1:06

Lots of complete garbage

sierra 1:08

Tips and tricks.

tre 1:09

So, we're going to go through the information directly from Equifax. So Equifax, there's two credit reporting agencies in Canada.

sierra 1:18

Mm-hmm.

tre 1:18

One of them is called Equifax, the other one's called TransUnion. In Canada, they're the ones that if you go to apply for a loan, they're the ones that the institution is gonna be asking for your credit score. Okay. And their credit score shows a bunch of information. It shows any open loans that you have right now, shows where your employee history is. It shows your current address. It shows a bunch of information. It's also how you track to see if somebody is fraudulently using your

sierra 1:51

Laundering money or something?

tre 1:52

Yeah, well no,

sierra 1:54

I heard fraud and was like

tre 1:56

It must be money laundering. No, fraudulently like open credit cards in your name and things like that.

sierra 2:01

Oh, yes, yes.

tre 2:02

Okay.

sierra 2:02

Identity theft.

tre 2:03

Yes

sierra 2:03

Possibly.

tre 2:03

Right. So that's how you would, that's reason people are gonna be stealing your identity typically is'cause they want to take credit cards out in your name or whatever.

sierra 2:11

Mm-hmm.

tre 2:12

So what is a credit score used for?

sierra 2:16

It is used for one of the Cs in lending.

tre 2:20

Well, there you go

sierra 2:20

Character, maybe? Credibility?

tre 2:23

Character. Yes. Character.

sierra 2:25

You didn't say yes right away. So I started throwing out more.

tre 2:30

Uh, so she's referring to there's some things that you look out when you're lending money to somebody to determine the risk of the loan. But your credit score is one of them, and that's the, it's character. That's how we, because we don't know the individual, like a bank doesn't know the individual personally, so they use something to determine, okay, what's the likelihood this person's gonna pay me back.

sierra 2:53

Yep.

tre 2:54

And so it's character. Somebody with a high credit score has proven over time that they know how to use credit well and they're very likely to

sierra 3:03

Pay it back.

tre 3:03

Pay it back. Okay. What things do you think would make up the credit score?

sierra 3:10

Uh, it would be things like paying your bills on time. Is that what you're asking? Sorry? Just things on the credit report?

tre 3:18

Kind of. So payment history.

sierra 3:19

Payment history

tre 3:20

Makes up part of the score. Yeah. Oh, so that's actually 35% of the credit score.

sierra 3:24

Oh.

tre 3:25

Payment history.

sierra 3:26

Now I'm, I'm like, what else is on there?'cause that's all I cared about. Um, does it count if, I guess, payment history. Timing, is that part of payment history? Well, depending on, are you on time with your payments kind of thing?

tre 3:42

That's payment history. Yeah. Are you late?

sierra 3:46

I don't know, what else?

tre 3:47

This is only 35%. You got

sierra 3:49

Address, phone number

tre 3:50

No

sierra 3:50

Name. What did you say at the beginning?

tre 3:53

You don't get points for just putting your name down.

sierra 3:56

What kind of a test is this? Um, let me think. Oh, how often you check your credit. Is that part of it? I'm trying. I'm

tre 4:05

Inquiries

sierra 4:06

reaching back into my banking.

tre 4:08

Yeah. So inquiries, so there's two types of inquiries. There's hard pulls and soft pulls.

sierra 4:14

Yeah.

tre 4:14

Hard pulls is when you are looking, you are applying for credit.

sierra 4:18

Yeah. Like you're going in for a car loan.

tre 4:20

Yeah.

sierra 4:20

You need to pull your credit, or a mortgage or something. Yeah.

tre 4:23

But a pre-approval, for instance,

sierra 4:25

Yeah.

tre 4:25

Is a soft hit and doesn't impact your credit score. So that's like, you're going to see if they would give you a loan. Pre-approval. You are applying for a bank account. That's a soft hit. Somebody is checking your identity,'cause we use credit reports to check people's identity. Soft hit, things like that is if it's, if you're applying for credit hard hit, if you were looking for inquiry sake for some other reason, soft hit doesn't impact it.

sierra 4:52

So even just curiosity.

tre 4:54

Yeah.

sierra 4:54

Can people do that? Okay.

tre 4:55

Yeah. So that's a soft hit. Right? And that's 10% of your credited score.

sierra 4:59

Okay. So we're at 45.

tre 5:00

Yeah.

sierra 5:01

Halfway there sort of

tre 5:02

Kind of.

sierra 5:04

Let me think how much credit you have. If you have. Eight credit cards, six car loans, whatever.

tre 5:12

Kind of, so there's

sierra 5:14

Lots of available credit? I don't know.

tre 5:16

So, you're mixing a few. Yes. Oh, okay. So there's used credit versus available credit. So for instance, if you have a$10,000 credit card and you are spending$10,000,

sierra 5:28

That's bad.

tre 5:29

That's bad, right? Yeah. You clearly cannot use credit cards properly. Okay.

sierra 5:34

Hmm.

tre 5:34

That's. Simple as that. Uh, that makes up 30% of the score.

sierra 5:40

Okay. So that was a big,

tre 5:41

That's a major one. Yeah, it's a big one. Yeah.

sierra 5:43

So what are we, how much more do I need?

tre 5:48

I'll go through it. So then there's credit history. So how long you've been using credit for.

sierra 5:56

Okay. Yeah.

tre 5:58

So if it's, if you just have a bunch that are recently opened,

sierra 6:01

So if you're new to credit. Obviously, it's not gonna give you bonus points for

tre 6:06

For being new. No.

sierra 6:07

For being new.

tre 6:08

No.

sierra 6:08

If you, if you've had a credit score that's been good for 30 years, they're gonna be like, that's bonus points for you.

tre 6:14

Yeah. So they want to be able to see that you have been able to properly handle credit over a long period of time.

sierra 6:22

Yeah.

tre 6:22

Okay. Credit mix.

sierra 6:24

Oh,

tre 6:25

So different types of credit.

sierra 6:26

Of credit. Yeah.

tre 6:28

So, they wanna see that you have managed regular loans on a... like in a chunk, that you've paid back, you have to pay back$500 a month for five years. Right, regular payments. Mortgages, different type of credit. Lines of credit, different type of credit. Credit card, different type of credit.

sierra 6:47

Mm-hmm.

tre 6:48

So the it's a positive if you have used appropriately well, many different types of credit shows that you're responsible, no matter the type of credit that you're being given.

sierra 7:00

Yep.

tre 7:01

Okay.

sierra 7:03

Is that all of them?

tre 7:03

That's all of them, yeah. So payment history, credit usage, credit history, credit mix inquiries. Okay. So based on those things, what are some legit ways that you can improve your credit score?

sierra 7:18

I would say start as soon as possible, because if you're looking for time

tre 7:24

mm-hmm.

sierra 7:24

You should, a lot of young people are scared of credit, I think, or don't understand it fully, but if you start as soon as you can and just use it responsibly, it's gonna benefit you.

tre 7:35

But let's not, let's not say use it responsibly. We'll go through exactly how, what does that mean?

sierra 7:39

Okay. Yeah. Well, okay.

tre 7:39

So use credit

sierra 7:41

Soon. As soon as you can soon. Yeah.

tre 7:43

So that tackles, which area of credit?

sierra 7:45

That's the one about time.

tre 7:47

Credit history.

sierra 7:48

History, yeah. Yeah.

tre 7:49

So if we looked at payment history. How do you think we would

sierra 7:53

Make sure you're not having balances sit on your MasterCard, or whatever credit card Visa as well.

tre 7:59

Well, that wouldn't impact it.

sierra 8:00

If you left a balance on it?

tre 8:01

You left... no. That has nothing do with payment history.

sierra 8:03

Well, I mean like you're not even paying the minimum balance. You're not,

tre 8:06

Okay, well that's not leaving a balance on there. That's skipping payments.

sierra 8:09

Sorry.

tre 8:09

Very different. Okay.

sierra 8:10

You're skipping payments.

tre 8:12

Be specific. I don't wanna give bad advice. I know. Be specific. So, history.

sierra 8:18

You're giving the advice, not me.

tre 8:19

Payment history, you want to make sure that there is no such thing as,"it doesn't matter if you don't pay" Just because the minimum payment is$50 and you're like, it's just 50 bucks. If you miss that minimum payment, that is marked on your credit report.

sierra 8:33

Yeah.

tre 8:33

So make sure you are paying what you owe according to the terms of the contract on time. Not late, not early. There's only those two options. No, no. You pay it on time.

sierra 8:48

That's it.

tre 8:49

Because you need that. You also need it to report.

sierra 8:52

Okay...

tre 8:53

So yeah, you, you pay it on time. That's payment history. You pay it as per the rule.

sierra 8:58

The contract.

tre 8:59

The contract, right. You prove you're

sierra 9:01

So the full

tre 9:01

responsible

sierra 9:02

balance, or the minimum balance, if it says it's owed this day, you pay it.

tre 9:06

Pay it

sierra 9:06

On that day or whatever. Make sure it's

tre 9:08

According to the rules of your

sierra 9:10

Contract.

tre 9:11

Of your contract, okay?

sierra 9:12

Okay. And then

tre 9:14

Use credit vs available credit.

sierra 9:16

So don't max out your credit available. If you have a credit card that's$5,000. Don't every month be spending$5,000. Make sure you

tre 9:27

Seika

sierra 9:28

Oh,

tre 9:30

is snoring.

sierra 9:32

Oh, she's sad now.

tre 9:33

Don't snore down there.

sierra 9:36

You woke her up. Who knows what she was dreaming of. Anyway,

tre 9:39

Bunny

sierra 9:39

rabbits. Um, sorry, what was it? Available... so

tre 9:43

yeah,

sierra 9:44

if you have that amount, don't go to the top every month, make sure you have room available.

tre 9:52

Mm-hmm.

sierra 9:52

So if you need more, if you're noticing you're getting close to that amount, you obviously need a higher credit

tre 9:58

Limit. Yeah.

sierra 9:58

limit. So you should up it.

tre 10:00

What do you think the credit utilization is that I found on Equifax, that they recommend staying below?

sierra 10:06

In general.

tre 10:07

For like a credit card? Yeah. So if you had a$10,000 credit card, what do you think they would, an ideal amount to stay below is.

sierra 10:15

7,000 maybe?

tre 10:16

That's what I would've said.

sierra 10:18

Yeah.

tre 10:18

3000.

sierra 10:20

What?

tre 10:20

30%.

sierra 10:21

That's wild!

tre 10:22

That's optimal. So I would say, I would say there'd probably be like a few lines there like, but 30% is, apparently, that's what Equifax say.

sierra 10:31

That's crazy.

tre 10:32

I would say, I think that's a little crazy. I would say 70%, like 7,000 seems more reasonable.

sierra 10:39

I was thinking you would, you would give yourself room for an emergency or whatever, you know, you're managing it properly.

tre 10:46

Yeah,

sierra 10:47

I would not have guessed that.

tre 10:48

I mean, I, yeah, I was surprised when I when I read that. But, so that means your line of credit, your$10,000 line of credit, that means that you'd want to be staying under$3,000 owing reported on to, to the credit bureau on that, which seems very low

sierra 11:03

According to Equifax.

tre 11:04

According to Equifax. Yeah. So I would say definitely below seven. I would add that says three. It says 30%, which seems very low to me.

sierra 11:13

Yeah,

tre 11:14

But, if you are maxing it out.

sierra 11:16

Bad news.

tre 11:17

Bad news. Right. So it will reflect negatively on your credit report. Okay. Um, what was the next one credit history. Credit mix.

sierra 11:28

Okay. So that's the types of credit you have?

tre 11:31

Yeah.

sierra 11:31

I used to tell people, now I don't know if this is correct, so correct me if I'm wrong, but I used to tell people who are young, get a credit card and put one or two bills under your name and have those being paid. Because things like your utilities show up on your credit Score paper,

tre 11:54

Some report, some don't.

sierra 11:54

bureau.

tre 11:55

The thing about a lot of them, Yeah,

sierra 11:57

Like the city,.

tre 11:58

I don't think it's bad advice. Yeah.

sierra 11:59

I would say like it, if you have a bill,

tre 12:01

But they tend to only do it if it's bad.

sierra 12:04

Oh, they only report it if it's bad.

tre 12:05

I, I'm trying to think of just perfect reports, and it's been a long time since I was checking reports, but it, it didn't mention anything. I couldn't find anything on Equifax about bill payments. Yeah. But I know they report and I know that I, when I was lending.

sierra 12:24

Because I've seen it sometimes.

tre 12:26

Yeah,

sierra 12:26

On it.

tre 12:27

It will show, but it is a negative, like if people miss it.

sierra 12:30

That's true. Now I'm trying to think of, well, I can't remember

tre 12:33

Because then they'll report, then I feel like they have a reason to report. But other than that, I don't know if they do. Huh. I

sierra 12:39

That would

tre 12:40

couldn't find anything on it. I couldn't find anything on their website about, about, um, about bills.'cause that was something that I would tell people as well. Like,

sierra 12:45

yeah,

tre 12:46

just

sierra 12:46

The mix, I probably, honestly, I would say don't worry too much about it at the beginning.

tre 12:53

It's only 10% of the score.

sierra 12:54

Yeah.'cause eventually you're gonna need more types of credit. You don't have to go out and get a bunch, you're not even gonna be able to get a bunch most likely because people are gonna say you don't have any credit so you can't.

tre 13:08

Yeah.

sierra 13:08

It's like the hole in the bucket.

tre 13:09

Yeah.

sierra 13:10

But yeah, I would say let that happen naturally.

tre 13:15

And I'll go over what my recommendations would actually be. But yeah, I would

sierra 13:19

But that's my recommendations. I'm just kidding.

tre 13:22

We'll go over what yours would be, and then we'll do mine.

sierra 13:25

Sort of compliance again. I'm joking.

tre 13:28

Okay. And then inquiries.

sierra 13:30

Um, so don't be trying to get a bunch of credit. You know, like Walmart and Home Depot, they have those credit cards. So don't just sign up for all those credit cards because they probably are a hard hit.

tre 13:43

Yeah.

sierra 13:44

And a lot of times people will be like, oh yeah, that sounds great, that I'll just sign up for another card even if I don't use it. No, just keep it simple. Why would you want,

tre 13:53

I don't think you need any more than two credit cards. I don't see the

sierra 13:56

Yeah.

tre 13:57

see why you would need them.

sierra 13:59

People like to be complic. Well, maybe they don't, some, somebody out there probably likes the points programs, and all the insurances. And

tre 14:07

What I think actually happens,'cause again, I work with very wealthy individuals, don't have tons of cards. I think it's people that want access to credit and they go and maximize the cards. I think it's people that struggle to utilize credit properly,

sierra 14:22

Yeah.

tre 14:22

are the ones that have four or five different cards.

sierra 14:25

Which again, is annoying from a marketing point of view. Again,

tre 14:29

Because it's kind of targeted towards them.

sierra 14:31

It is targeted. It's, yeah, you can save this much right now. Again, it's short term incentives that people who are in more dire straits need those things.

tre 14:42

Mm-hmm.

sierra 14:42

So they'll be more likely to sign up for, yeah. We've already talked about this in the Klarna stuff. I really don't like that,'cause it feels very

tre 14:48

predatory. Yeah.

sierra 14:48

Yeah.

tre 14:49

Absolutely.

sierra 14:50

Ugh.

tre 14:50

Yeah. But one thing for, oh no. Well, okay. Yes. So those are, those are the things that you should absolutely do.

sierra 14:59

Mm-hmm.

tre 14:59

As I mentioned, they, so they said inquiries is 10% credit mix is 10% credit history is 15%. I would say those three things, apart from just going out and getting a bunch of hard hits, which if you're trying to build credit, probably be doing anyway.

sierra 15:14

Yeah, and don't be constantly checking your credit score.

tre 15:15

But that's got nothing to do with hard hits.

sierra 15:17

But it's soft hits, isn't it? Yeah.

tre 15:18

But soft hits doesn't, doesn't impact your credit score. Yeah.

sierra 15:23

I thought, I thought soft was like just a little,

tre 15:26

No.

sierra 15:26

Just a little negative.

tre 15:27

No. See, I said I've heard a lot of garbage around credit scores.

sierra 15:32

Hey, I'm, I'm learning too.

tre 15:35

Your credit score does not take into account requests a creditor has made for your credit file or credit score in order to make a pre-approved credit offer to review your account with them. And it does not take into account your own requests for a copy of your credit history. These are examples of soft inquiries or soft pulls of your credit.

sierra 15:53

Hmm. There you go.

tre 15:54

So, no, only hard hits matter. Soft do not.

sierra 15:58

I find it really funny that they have this, and I worked at a credit union like I was, I know I wasn't an advisor per se, but I did open accounts. I helped people.

tre 16:08

Mm-hmm.

sierra 16:09

People ask me for advice. And I worked with advisors, and not to call anybody specific out, but I heard some of,

tre 16:16

Oh, I've heard so much stuff. I, yeah.

sierra 16:18

Like nobody, does anybody actually know?

tre 16:21

Yes, it's right here. It's, it's right here. It's just anybody wants, what happens is like people, it's like folk tale, right? Like, it's like somebody will say it. Yeah. And then, well, I just tell my clients to do this and my members to do this.

sierra 16:35

Or, my uncle told me and he has great credit.

tre 16:37

Yeah. That just, yeah, that's the, that's the best one. I love that. Where it's somebody with great credit is giving this weird advice. It's, well, I did it and I got great credit. It's like causation versus correlation.

sierra 16:47

Yeah.

tre 16:47

That whole, it's like just because you have great credit and you paid off your credit cards every single time you used it doesn't mean that that's the reason you have great credit.

sierra 16:58

Yes.

tre 16:59

Right. It's like I could now go, we both have Another thing about credit. It is, and once you are over 750, who cares?

sierra 17:08

Yeah.

tre 17:08

It is not a,

sierra 17:09

Nobody else cares. Yeah.

tre 17:10

No, it is not a. Uh, at a certain point you want to have good credit.'cause you want to be, you want any credit that you are offered, but to obsess about it, once you, if you're repairing your credit, obsess over it. Repair it.

sierra 17:24

Yeah.

tre 17:24

But once you hit 750+, who cares? Other things in your world? Yeah. The only time I care about it is when we are doing something and it's still like a few points less than yours, um,

sierra 17:37

It's because you moved from the UK and

tre 17:40

Yeah, probably

sierra 17:40

you had to start credit here

tre 17:41

Yeah,

sierra 17:41

a little later than I had started.

tre 17:43

I think, didn't you have a, I think you had a parking ticket, right?

sierra 17:48

No, I think I know what you're talking about. I had a... am I really gonna tell this story? Nobody wants to know. Right, right. No, I remember. What was it? It was a bill from the City of Regina when we moved.

tre 18:04

Oh yeah.

sierra 18:05

And it had been sent to our old address and it just got lost. And

tre 18:10

yeah,

sierra 18:10

it was a very small amount that we were still owing for water.

tre 18:14

Well, what, do you remember what it was?

sierra 18:15

I think it was like$50 maybe. Okay. And all of a sudden I got this letter.

tre 18:22

That was years, right?

sierra 18:22

Yeah, it was years. And I, nobody called me, like I didn't have any other mail, I mean. That I knew of anyway.

tre 18:28

And you still had a better credit score than me. So

sierra 18:30

I did. They, they sent it to collections and I got the letter for that and I was like, what the heck? What is sent to collections? And then I called them, squared it up immediately and I asked the girl, is this gonna go on my credit report? Because I'd never had anything bad on my credit card. She's like, yeah, it will, but then a few years later, we pulled our credit and I was still above you.

tre 18:53

I don't remember what it was. It was eight something or something like that. Anyway, yeah. What I'm saying is that the, the point is that it's that don't obsess about the credit score. The credit score is, is something that financial institutions use to determine your responsibility with credit. If you are responsible with credit, your score will go up. It is that, is that it is that simple. Yeah. Going back to the actual stuff. Okay. So what would you, what would I actually recommend that people do to build credit? Focus on the big areas. Credit history, credit usage versus availability and your payment history. Those are the big ones. Between those three, that's 35, 30 and 15%.

sierra 19:38

Oh yeah. That's

tre 19:38

the vast, vast, vast majority of your score.

sierra 19:43

Yeah.

tre 19:43

Is made up of those things and those things you have direct control over.

sierra 19:47

So in easy terms, you would say have available credit.

tre 19:53

As early as you can.

sierra 19:54

As early as you can. Don't use more than

tre 19:58

30%. Says 30%.

sierra 20:00

30%.

tre 20:00

So I'm gonna say 30%, in brackets next to it in the Tre version, with zero proof. I would say 70% is for some, that's the number that I've, again, people say the website

sierra 20:13

causeation vs correlation.

tre 20:14

Equifax says 30%. So

sierra 20:17

Imagine where our credit scores could be if we stopped using up to

tre 20:19

Oh, man.

sierra 20:20

7%, 70.

tre 20:22

I think 30% is nuts. I just don't know. I mean, that's, you would end up with a really, really high limit if he was trying to genuinely stay below 30%.

sierra 20:33

Well, I'm thinking people who sign up for cards at the beginning isn't the limit usually$500 or something.

tre 20:39

Yeah.

sierra 20:39

So what would that be? A hundred bucks? It's... I don't actually know the math

tre 20:43

$150.

sierra 20:44

Don't ask me, I'm... sorry. Good thing I was close at least.

tre 20:51

It was. Yeah, it was pretty close.

sierra 20:53

Oh, so

tre 20:53

Yeah, I guess you could, I mean, you would just put on like this day and age, like a Big Mac meal a month and pay it off.

sierra 21:00

No kidding.

tre 21:01

That'd be what you would use. I dunno.

sierra 21:02

My gosh,

tre 21:03

But

sierra 21:03

brutal.

tre 21:04

use it. But, my recommendation. Focus on those three things. So if you're trying to build credit, start as early as humanly possible. Get a credit card. I know there's lots of like, as long as you use it responsibly. The credit cards are great. I use, we use a credit card for everything practically, just. I've also never paid interest on the credit card.

sierra 21:27

Yeah.

tre 21:27

Right. So number one rule is if you do not have it in your bank account, you do not put it on a credit card.

sierra 21:33

Yeah.

tre 21:33

Your credit cards are not designed for... no, they are designed. You should not use a credit card to spend money you do not have.

sierra 21:40

Yeah.

tre 21:41

If you do not have the money, you cannot be spending the money. Yeah. A credit card is, use it

sierra 21:47

As a tool.

tre 21:48

Yeah. Paid off in full every single month. If you are finding that you cannot pay it off in full every month, then credit cards are probably not for you.

sierra 21:59

Or, work on your self-discipline. There are ways to do it. People sometime, I just don't love the excuse of oh, you have to give up the tool. It's like, no, you're a human. You can change, you can do better.

tre 22:11

Yes.

sierra 22:12

Come on people.

tre 22:13

Yeah. I, I, I agree with you. To a degree, to a point.

sierra 22:17

Yeah, I get it.

tre 22:17

You can get through life without credit cards, if they are something that you struggle to use properly. But you're right, you will never, if you cannot use a credit card properly, you'll never have full control over your finances or anything like that. It's, it's, they're pretty much exclusive... opposite to each other. Because it means that you have very little self-control. You

sierra 22:37

or you're kind of the type, I'm getting scared to start saying this. You might be the type of person to justify things, self justify and not take accountability.

tre 22:49

Yeah.

sierra 22:49

Oh, I had to do, it was an emergency. Okay. Well. Emergencies are very rare and one-off things. That's why they're called emergencies.

tre 22:56

The definition of emergency is very different for different people, right?

sierra 23:02

Yes.

tre 23:02

So, one thing that I often hear is like, my car broke down. If somebody can find me the car that they can expect to never break down

sierra 23:12

The Pontiac Vibe...

tre 23:14

What, the one that's currently got no compression in the third and fourth chamber, and we probably have to replace? That one? That car that never breaks down? But you're right, it didn't break down for how long have we had that thing?

sierra 23:25

Yeah,

tre 23:25

Ages and ages and ages.

sierra 23:27

Yeah.

tre 23:27

Still, I do not expect it to continue on forever. Right, right. Like, you know, cars break, you know, stuff. It is not a... how could we have seen this coming? Your vehicle breaking down. That is like, oh, I had to replace tires. What you mean the thing you should be doing every so often, every few years? These are not,"I couldn't plan for this," these type of events.

sierra 23:48

Honestly, I can't really think of, of blah. Wow. This is a rough one for us. Did I even say a word just then? I don't think so. I can't think of an emergency that you couldn't plan for. If that makes sense.

tre 24:03

No.'cause as soon as you have an emergency fund,

sierra 24:06

It's like the mental, I guess you don't need to think of the specific emergencies, but things like, I've heard furnace, uh, water heaters overflowing or whatever.

tre 24:16

That's what an emergency fund is for. Right.

sierra 24:17

You don't need to think of every single emergency. You just need to say, okay, this is my emergency fund and if something comes up that I wasn't planning for

tre 24:26

mm-hmm.

sierra 24:26

Then I have the backup. But

tre 24:28

Yeah.

sierra 24:29

Sorry, we're kind of,

tre 24:30

and something very controversial that I'm gonna say anyway, uh,

sierra 24:33

Yay.

tre 24:35

Is when it comes to, and I will probably end up doing a episode on debt and stuff like that. But when it comes to an emergency fund and, people love to give money, right? It's, it's, it's great. Everybody should give money to those others that need it, to family, et cetera, et cetera.

sierra 24:54

Mm-hmm.

tre 24:54

If you have not built, if you do not have a fully funded emergency fund. You cannot afford to give money. You, you can't. I, I know again, people think whatever they want to think, but you are putting other people in the situation that they might have to bail you out so you could feel good about yourself.

sierra 25:15

Mm-hmm.

tre 25:15

Basically,

sierra 25:15

it's like a loop of

Tre (2) 25:17

you if you can't afford, if your cousin is asking you for money and you can't afford to replace your furnace, if it breaks, and we are in Saskatchewan. What are you going to have to do in order to replace your furnace? You then gonna have to go ask your aunt for that money, if that's the position that you are putting yourself in to give to that other individual. That is not okay. You need to again, another controversial thing, especially

sierra 25:45

keep going

tre 25:46

as a family person. It's like my family comes first in those regards. So by me making decisions that would put my family's stability at risk, just so I feel good about helping somebody else, I am not really helping. I'm not helping the people that I have the genuine responsibility to.

sierra 26:11

Mm-hmm.

tre 26:11

Right, and emergency funds are a no argument thing for me when it comes to you building anything for yourself. Like if you do not have an emergency fund, you are one thing away from huge consequences and it's not even one thing that never happens. It's like things that will happen. Guaranteed.

sierra 26:35

Yeah,

tre 26:36

you, your water heater is going to go, your furnace is going to go. Your car is going to break down. You're going to need to buy a new car. You're going to need to replace new vehicles like you are going to, you're going to need to do these things. You need to plan ahead of time.

sierra 26:53

Yep.

tre 26:53

Right.

sierra 26:54

That makes sense.

tre 26:54

Just because family needs it or somebody needed it, if it's coming from other money, one thing, it's completely different. But to be pulling money outta your emergency fund to help somebody else, very dangerous. Very scary.

sierra 27:09

So what if. I see what you're saying. Uh, no, sorry.'cause I was basically gonna say if you have your, if you have your emergency fund and it's an emergency for them and they need it. And you could afford, but then,

tre 27:24

but no,

sierra 27:24

you can, but you can't afford this.

tre 27:26

You can't afford it if it's coming from your emergency fund.

sierra 27:28

Right.

tre 27:28

If, if you've fully funded your emergency fund and you have investments and savings and stuff outside of that and you can afford it, that's completely different. I'm saying if you are taking out of your emergency fund,'cause that's the only money you have available and you're giving it to somebody else for their emergency fund. Not Okay.

sierra 27:45

Yeah.

tre 27:45

For their emergency, not Okay. That is, emergency funds are the basic start. Like you, you do not have the money to give it away.

sierra 27:55

Mm-hmm.

tre 27:55

You don't have it. So emergency fund, just, I can't stress it enough. The amount of people that when I was working, like in the branch and, um, working with a slightly different demographic, uh, you, you try so hard to help people. And you put you, you try and you try and you try and you try to coach them and talk'em through things. Everything breaks down. You can have a year of hard work to get out of debt, and a single emergency that they're not prepared for will put them back into it.

sierra 28:30

Yeah.

tre 28:30

So having an emergency fund is table stakes. You have to have somewhere that if it happens you have access. And if you are very responsible with money, you can use other sources as an emergency fund. I use a line of credit. I have a line of credit sitting there. If I need it, I could access it. But that's not the only money that I have access to. It's just, it'll be the quickest that I, that I could

sierra 28:54

and it's not cash.

tre 28:55

It's not cash.'cause I hate sitting on a bunch of cash,

sierra 28:58

See episode, whatever it is.

tre 29:00

Almost every other one. Um, it's just, I, yeah. I, I, I know. It isn't controversial. I don't think it is.

sierra 29:10

Yeah.

tre 29:11

But I know it is, if that makes sense.

sierra 29:12

Yeah, for sure. I could see what you're, why you said it could be controversial, but I can completely understand your point as well. Yeah. I think people who, again, unfortunately who would fall into that category category are still the people who, they're so kind. They're so like, they have such good intention, but it's not actually helpful.

tre 29:36

Mm-hmm. They're the same people that will enable instead of help. Right.

sierra 29:41

Yeah.

tre 29:41

So like somebody needs help, somebody's struggling with whatever the issue is and they will enable that person instead of help that person get better.

sierra 29:50

Yeah.

tre 29:50

And there is a fine line, but it is a really important line to distinguish. If you are enabling somebody to continue to make bad choices, you are enabling, you're not helping that person. But it will make you feel better.

sierra 30:01

Yeah.

tre 30:01

And there is that line.

sierra 30:04

Yeah.

tre 30:05

But anyway, so I can't even remember if I went through

sierra 30:09

We went off

tre 30:09

The things. Yeah. I went wildly off topic. Okay. Payment history, make sure you get credit as early as you can. Leave it open, like don't change credit cards a bunch. If you start at 18, as soon as you can, get a credit card. Keep that one account open for the long term. Get a, get a free card with the$500 limit and then when you want to, when you have better credit and you can get better cards, just keep that one open until your credit's in a position where you are happy with it. Right?

sierra 30:39

Yeah.

tre 30:39

You don't even have to use it. It's just you need time and there's only one way to get time and that's go through it.

sierra 30:45

Just to clarify, you don't even have to use it if you get a new card. You have to use it at the beginning.

tre 30:51

Yes.

sierra 30:51

Get your free card, start using it. Don't go to the limit.

tre 30:57

Keep under 30%.

sierra 30:59

Keep under 30%. Pay it off every month, as per the contract or whatever. Yeah, and

tre 31:05

Don't miss any payments,

sierra 31:06

Don't miss payments..

tre 31:07

If you need to set it up so you have automatic payments set up, do that, whatever it is, especially while you're building. Because you making mistakes during the building process is a lot more impactful than you going into collections when you already have an 800 score. Right? Like it's,

sierra 31:21

I'm pretty sure they were like, ah, it's fine.

tre 31:23

Probably.

sierra 31:24

Like that's bad. But it's true because they probably saw the amount and were like, oh

tre 31:29

Yeah, and you've proven all the other things and everything else, that you are, you know, so

sierra 31:35

somewhat responsible except if we move

tre 31:38

Yeah, then not, the water company and Yeah. So available credit and credit history, honestly, you do those, those things and focus on that area. You build good enough credit scores. Yeah. And really your goal is just to get to a place where you get preferential rates, which is around 750.

sierra 31:57

Mm-hmm.

tre 31:58

Any institution, once you get over that 750 mark ish, nowhere will deny you lending.

sierra 32:04

Yeah.

tre 32:05

You'll probably get good rates. Nowhere will deny you lending if you

sierra 32:10

meet the other criteria. Yeah,

tre 32:12

yeah, exactly.

sierra 32:13

Yeah.

tre 32:13

But so yeah, nice and simple.

sierra 32:15

There you go.

tre 32:16

No extra craziness. Keep it simple. And if you want to check out more. Go to Equifax. Yes, go to TransUnion. Go to the website itself and they have articles and articles on it. I just pulled like and summarized like three or four of them that I saw on there, but they all, the information's there, so I dunno why we just make it up.

sierra 32:38

This is one of those things where if you're making a decision, I remember in your episode one or two, one of them. You say, you should only take advice from two people. Either people who are in the position you want to be in or the experts. Yeah. I would say this is when you should just go the experts. Just go to the experts.

tre 32:56

Experts, yeah.

sierra 32:56

Just stop listening to Uncle Fred's advice.

tre 32:59

I wouldn't even say the experts,'cause I would say like, I would say just go to the source and read the material,'cause it's all there.

sierra 33:05

Just read the rules.

tre 33:06

pretty simple. Yeah.

sierra 33:06

It's basically a rule book.

tre 33:08

Yeah.

sierra 33:08

Follow these rules and everything will go well.

tre 33:11

Yeah, it's very simple. It really is.

sierra 33:14

Yeah.

tre 33:16

Okay, perfect. Awesome. That, that's, that's the end of the episode. Next episode is on RESPs, so it's an account episode, so probably very different than what you may have heard of before. Um, because we are gonna talk about, not, or we'll talk a little bit about the account itself, but we're gonna talk about the accumulation phase and the deaccumulation phase and strategies to do it. So, whereas before, maybe. You know that there is grants and stuff like that, but how to maximize and take advantage of them. That's what we're gonna go through. So the strategy behind it. Okay,

sierra 33:51

perfect.

tre 33:52

So we will see you in the next one. Bye bye. Thanks for listening to this episode of the Plain English Finance Podcast. Tre Bynoe certified Financial Planner. Chartered Investment Manager is a financial planner with TCU Wealth Management and Aviso wealth. You should always consult with your financial, legal, and tax advisors before making changes. This podcast is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any securities. The views expressed are those of the individual and are not necessarily those of Aviso Financial Inc. Mutual funds and other securities offered through Aviso wealth, a division of Aviso Financial, Inc.