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Economy

Your Ultimate Guide to Credit Scores in Canada

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Your credit score is crucial when applying for a home loan, auto loan, or whatever loan you want to take. A healthy credit increases your chances of getting approved by the lender and enjoying perks such as lower fees and interest rates.

Knowing your credit history is the first step to having a good credit score. In the medical profession, you have to diagnose the illness before you can start treating it. Unless you know your credit score it will be difficult to improve it.

Read this credit score guide in Canada and the ways to build or improve credit.

Components of a Credit Score

There are five components that make up your credit score. You have the length of credit history (15%), amounts owed (30%), payment history (35%), new credit (10%), and credit mix (10%). Each of these factors impacts your credit and constitutes your credit score.

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In Canada, credit scores range from 300 (the lowest) to 900 (the highest). It’s crucial that you get a good to excellent credit score to apply for a loan with no hassle and lower the costs of borrowing money.

Credit Scores That Avail You of Better Rates

A good credit score depends on what scoring model you’re using. A score of 660 to 724 with Equifax is deemed to be a good credit score, while a 720 to 780 is a good rating based on TransUnion’s standards.

It means a Canadian with a score of at least 700 to 720 has more chances of getting better rates for a loan. You have a very good rating if you have 740 to 799, while 800 or higher is an excellent credit score.

Due to lower delinquency rates and improvement in credit utilization, the average score has made a 20-point increase over the past decade.

A Fair Credit Score

Individuals with a rating of 600 to 659 are considered to have a fair credit score. If you want to apply for a loan with lower interest rates, a credit score within this range may be challenging to achieve your goal.

A fair credit score signals a certain degree of risk, which makes lenders hesitant to offer better rates. Nevertheless, you might still get approved for a loan at a bit higher interest rate.

A Bad Credit Score

A credit score below 560 doesn’t bode well for loan applicants who want lower interest rates. This number means that you have a bad credit history, and lending companies might turn down your loan application, or you might pay an exorbitant cost when borrowing money.

But a bad credit score shouldn’t be a reason to lose hope. Instead, make it your motivation to improve your credit and avail of better rates in the future. You can develop a plan to build or fix your credit score before applying for any loan.

Building Your Credit

If you have zero credit history, you should start building your credit as soon as possible. There are several things you can do to build credit. One is ensuring that your utility bill payments are reported to major credit bureaus. For example, mobile phone bills and electricity bills can be used to build your credit.

 

Having a credit card is another way to build credit. Just keep your credit utilization ratio lower and make timely payments to achieve your goal. It’s also wise to take a credit-builder loan that’s easy to repay.

Improving Bad Credit

Fixing bad credit will take time, but it’s doable. First, you have to check your credit score to know how much work to be done to improve your credit. Then, pay your debts and bills on time and make sure it’s reported to credit bureaus.

 

Also, avoid applying for credit too frequently because it can further hurt your credit score. You also have to use 30% or less of your available credit. And make sure to monitor your progress.

Takeaway

Now you have an idea of how to take care of your credit score. Your credit health is important if you need to get a loan and qualify for lower interest rates. Make sure to always check your credit reports and get a good credit score. Know the strategies to build or improve your credit.

Economy

UK to Be the Only G-7 Economy in Recession This Year, IMF Says – BNN Bloomberg

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(Bloomberg) — Britain faces the bleakest two years of any major industrial nation with a recession in 2023 and the slowest growth of peers in 2024, the International Monetary Fund predicts.

The UK will be the only Group of Seven member whose economy will shrink this year, with a contraction of 0.6%, the IMF said. The Washington-based institution downgraded its outlook by a massive 0.9 percentage point from October, saying higher interest rates and taxes along with government spending restraint will exacerbate a cost-of-living crisis.

The forecast highlights the challenges Prime Minister Rishi Sunak’s government faces in the leadup to the next election. Chancellor of the Exchequer Jeremy Hunt suggested the economy is likely to perform better than the IMF expects.

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“The governor of the Bank of England recently said that any UK recession this year is likely to be shallower than previously predicted,” Hunt said in a statement. “We are not immune to the pressures hitting nearly all advanced economies. Short-term challenges should not obscure our long-term prospects.”

In 2024, the economy will rebound only slowly, growing at 0.9% — matching Japan and Italy at the bottom of the G-7 league table for growth.

The forecast anticipates the first UK recession, excluding the pandemic, since the financial crisis in 2009. Across the two years leading up to the deadline for Prime Minister Rishi Sunak to call an election, the economy will effectively stagnate — expanding just 0.3%. 

The IMF did not downgrade any other G-7 economy this year as it raised its global growth forecast from 2.7% to a still sluggish 2.9%. An escalation of the war in Ukraine or a health crisis in China as Covid spreads could set back the world economy, it said in its World Economic Outlook update. However, “adverse risks have moderated since October.”

The downgrade to UK growth is striking because the IMF’s October forecast was prepared before the £45 billion ($55.7 billion) unfunded tax giveaway in the September budget during the short-lived Liz Truss premiership. At the time, the fund said the fiscal splurge would have boosted growth.

Since then financial conditions have tightened, rising borrowing costs for businesses and households. The Bank of England has raised rates from 2.25% to 3.5%, and markets now expect rates to settle around 4.5%. The IMF said it’s downgrade also reflected “tighter fiscal” policy but, according to Treasury figures, fiscal policy is looser this year than at the last forecast.

In October, the IMF attacked the UK’s massive spending spree — arguing that fiscal and monetary policy should not be working at cross purposes and that the government needed to bring the public finances under control.

IMF Chief Economist Pierre-Olivier Gourinchas repeated the warning. In a blog post alongside the forecast, he said many countries are being too generous with their energy support, which is “costly and increasingly unsustainable.”

Instead, countries should “adopt targeted measures that conserve fiscal space, allow high energy prices to reduce demand for energy, and avoid overly stimulating the economy,” Gourinchas said.

He also urged central banks, like the Bank of England, to press on with rate rises even if it means inflicting more misery on cash-strapped households. The BOE is expected to raise rates a half point to 4% on Thursday.

“Where inflation pressures remain too elevated, central banks need to raise real policy rates above the neutral rate and keep them there until underlying inflation is on a decisive declining path,” Gourinchas said. “Easing too early risks undoing all the gains achieved so far.” 

Read more:

  • UK Wage Inflation Points to Another Big Rate Hike This Week

–With assistance from Andrew Atkinson.

©2023 Bloomberg L.P.

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Economy

In Egypt, economic heat of Russia's war in Ukraine is only getting worse – Al-Monitor

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GIZA — With every passing day, the money in Hanan Hussein’s purse becomes more and more dwarfed by the items in this crowded vegetable market in Embaba — a densely populated neighborhood in the Giza province of Greater Cairo.

Hussein, a mother of two in her early 50s, looks at the price tags of food items placed on the carts or on the wooden tables jockeying for limited space on both sides of the market and shrugs her head, knowing that the few pounds she has can only buy a few of the items on display.

“Tomatoes selling for 10 pounds a kilo, potatoes for 12, zucchini for 15 and rice for 19,” she says to herself.

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“What are these prices?” she asks herself as she moves toward the end of the market.

Hussein passes by the shops selling fish, meat and chicken but pays no attention to them.

When she reaches the end of the market, she turns back and starts a new journey through the vegetables and fruit on display, hoping to come across something she can buy.

“We can’t afford these high prices,” Hussein told Al-Monitor, pointing at the vegetables in front of her. “I am looking at all the items on my shopping list, but it looks like I can’t buy any.”

Tens of millions of Egyptians, especially the poor and the middle class, are affected by the economic repercussions of Russia’s war on Ukraine.

Al-Monitor/Premise poll released this month found 68% majority of the population in Egypt, Turkey, Yemen, Tunisia and Iraq worried about their ability to access food in the coming months.

Having initially deprived the Egyptian tourism sector of billions of dollars in revenues, with Russians and Ukrainians constituting a third of annual tourist arrivals, the war has caused food import-dependent Egypt to pay more for its imports, especially cereals such as wheat and maize, according to the World Economic Forum.  

Disruptions caused by the war on the international supply chain are also translating into a higher price for industrial and agricultural production requirements in a country where dependence on imported production essentials is very high.

Egyptians are feeling the pinch, with price increases in shops and markets across the country.

Hussein has stopped buying fish, chicken, meat and table condiments, among other items.  

So has Alaa Mamdouh, a civil servant in his mid-30s who has one child.

Like many Egyptians, Mamdouh has decided to take on a side job to supplement his income. However, with less than 4,000 Egyptian pounds (less than $133) from both jobs, he can’t manage.

“I don’t know what to do,” Mamdouh told Al-Monitor. “People like me can’t keep going with food prices assuming new heights every day.”

Other Egyptians are complaining about their income being dwarfed by growing commodity prices.

Deep beneath their suffering is an inflation rate that is hitting an all-time high, threatening a political and security backlash.

Fears from this backlash have prompted Egyptian President Abdel Fattah al-Sisi to assure the public that things are going to be alright.

“I know that some people are worried, and they have reasons to be concerned,” the Egyptian leader said Jan. 6 after entering a large church in the New Administrative Capital, a new megacity he is constructing in the desert, to congratulate his country’s Coptic Christians on Christmas. “But you have to be sure that God will not fail us,” he added.

Two days later, he asked Egyptians not to buy into the uninformed rhetoric of those who spread fear about national economic conditions.

“We did not enter wars or squander the wealth of our country,” Sisi said. “Egypt did not cause these conditions.”

As he spoke, the Egyptian pound continued to lose its value to the US dollar, the main import currency in this country — at the time of writing selling at 30 pounds per dollar.  

Egypt has had to depreciate its national currency two times since February 2022, says Al-Arabiya News.

It scrapped its managed exchange rate regime a few days ago in light of an agreement with the International Monetary Fund and as part of other measures that will also include the elimination of energy subsidies and the withdrawal of the state from economic activities.

A cheaper pound weakens the purchasing power of people like Hussein and Mamdouh and stagnates the business of people like fishmonger Ahmed Hamdi, who sat outside his shop in the same market in Embaba where fish prices filled passersby with aversion.

“People come here only to ask about prices, but nobody buys anything,” he tells Al-Monitor.

Some fellow traders closed down their shops due to sales spiraling downward and losses spiraling upward, he says. “I may do the same if things get worse.”

To reduce the intensity of the downturn, the government has opened dozens of outlets where food is sold at a discount. It also increased food subsidies for tens of millions of people registered in the national food rationing system, according to Daily News Egypt.

Economists say, however, that these efforts will not pay off without proper market control.  

“Traders use current conditions to amass huge wealth by increasing monopolies and raising prices,” director of think tank Capital Centre for Economic Studies Khaled al-Shafie told Al-Monitor. “This requires strong supervision over the market.”

The lack of this supervision caused a traditionally reticent parliament to grill the minister of supply a few days ago.

Parliament members criticized the minister for his failure to control runaway commodity prices.

“The minister does nothing to prevent traders from exploiting the poor,” parliament member Nafie Abdelhadi told Al-Monitor. “Commodity prices are rising dramatically, but the minister is only watching.”

This leaves people like Hussein in limbo. Every day, she faces the riddle of matching the little money in her purse with the needs of her family.  

“It is a new, difficult test every day, but I am sure God won’t forget us,” she says.

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Economy

Power Crisis Triggers Water Cuts in South Africa’s Economic Hub – BNN Bloomberg

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(Bloomberg) — Parts of Johannesburg, South Africa’s economic hub, are being subjected to renewed water-supply cuts as ongoing electricity shortages disrupt pumping operations.

A power failure at Rand Water’s Eikenhof pump station, which supplies reservoirs in several high-lying areas of Johannesburg, resulted in critically low levels of supply, the municipality said on Twitter on Monday. While repairs have been completed, it warned that time is needed to replenish the storage system. Alternative sources of water have been arranged for hospitals.

State-owned utility Eskom Holdings SOC Ltd., which provides 90% of all of South Africa’s electricity, is unable to meet demand for power from its mostly old and poorly maintained plants, and has instituted rolling blackouts to keep the national grid from collapsing. There were record outages last year and they show no signs of abating.

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The power rationing that can last for hours at a stretch is taking an ever-increasing toll on the economy and disrupting manufacturing, mining and farming. Cape Town, the country’s main tourist hub, partially shut several beaches during the height of the holiday season late last year after wastewater pumps broke down.

Read more: Why Blackouts Are Still Crippling South Africa: QuickTake

Municipalities must ensure sanitation infrastructure, sewer-pump stations and generators are maintained and continue operating to ensure there aren’t sewage spills, according to the Department of Water and Sanitation. It confirmed that the power cuts were, however, reducing the reliability of water supply to consumers, with the effects varying between different areas depending on the capacity of their back-up generators. 

“The stop and start process at the water-treatment works negatively impact on water quality,” the department said in an emailed reply to questions. “The power cuts also negatively affect the treatment process at the waste-water treatment works, resulting in poorly processed discharge from the treatment plant. The storage capacity at the sewer pump stations were not designed for long durations without pumping. That also increases the risk for possible spillages.”

Crime and vandalism has also impacted negatively on Johannesburg’s water supply: thousands of water meters, manhole covers and hundreds of water tanks were stolen over the past year, according to the municipality. 

©2023 Bloomberg L.P.

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