This is the kind of stuff your banker absolutely don't want you to know... So better read this! It's a secret report!
This happen a little while ago, when I present myself at RBC Royal Bank Branch located downtown Montreal at Ville-Marie. Once again, I had forgotten my PIN, and needed to have it reset. Following what, the cashier tell me that I had a good account, that I may qualified to get more credit or get something else. And then I ask: and how about a lower interest rate for my credit line? She told me I may be able to get it, but I would need to take an appointment with a representative. I said ok, and I got my appointment. This was totally a Quebec sale pitch and I fail into it. ME, I fail into a financial sale pitch! I am not very proud of myself, I should know better by now!
At the appointment, the rep did my credit evaluation. Everything was good, but he was not able to get me a lower interest rate other than the current 7.52%. But, he was able to increase my limit of another 10 000$, but the interest rate will have to be of close to 9%. Yak! No thanks! So basically, I went through a credit evaluation for basically nothing and as you can imagine, I was pissed! So F Quebeckers! I hate you! I hate you sooooooooo F much! BOUUUUUUUUUU! Quebec bankers are so not impressive. I never been served with respect while being in Quebec. Quebec financial institution? They all suck! In their willingness to succeed, Quebeckers became excessively arrogant. It's not because your a banker, that you work for a bank or other that you necessary know what you are in. Truly, here in Quebec, individuals are cheaters and liars, not very responsible and humane, extremely hypocrite and really not good at business. Not at all.
BUT... despite the hate...
I was able to take a look at my credit file. My score was exceeding the 380 on 410 (at that time). Pretty good knowing how much I hold in debt. So I was happy to learn about my good credit score. In the credit file, as you can imagine, all loans, all credit cards, all credit lines I have appear in there... at the exception of the margin account.
My margin account is link to my non-registered portfolio that I own at TD Waterhouse. A margin is like a credit line. The interest rate is quite low, only 4.25%. But the tricky part is that the amount of money available on the margin depends of the value of the portfolio. And that variation is being measure on a daily basis by TD Waterhouse.
I had paid my 5 000$ TD credit line using my margin account money. I had a remained 22 000$ left in cash, and a 40k in stocks. That’s quite a lot of money, but I had been investing since 2005 now and I felt confident by doing what I did with my money. Not that I am an expert, but everything is pretty much stable because major part of my non-registered portfolio had been build between 2008-2010. I opened my margin account in December 2010.
So this is where the gangster style is hitting. I had paid my 5 000$ TD credit line using my margin account money a while ago. That detail does not appear in my credit file. And trust me, I took a deep look; I even touch the computer screen of the representative. I had bad eyes, but I took time to study what I had in front of me and that include my fingers on the screen... I can confirm, the margin account, the 40 000$ I had borrowed at 4.25% is not from my credit file. It does not appear anywhere! Reason behind is that a margin account is not a financial product that rely on the credit score of an individual. The margin only reflects the value of my wonderful portfolio. So knowing that is quite hot.
In my credit file, my TD credit line appeared as being paid off, but no one at the exception of TD knows that the money is coming from my margin account (because my margin account is at TD Waterhouse). Isn’t nice? This mean that anyone included me could pay other credit products (like the one at 10 000$ I have at RBC and the 5 000$ I have at BMO) using margin account money. The product appeared to be paid off, and the banker won’t have a damn clue of where the money is coming from (at the exception of TD, of course). Paying off credit lines, among other, is a good way to increase a credit score. The only thing you need to be careful with is the management of the margin account itself.
Once, a TD rep gave me a good advice, not to use more than 30% of the margin account value. I always find this as being a good advice because fact is, the amount of money available on a margin varies on a daily basis and all depend of the stock market condition. But despite this, margin account money can be use to do anything and everything you want, including paying debt at a higher interest rate and including a Louis Vuitton bag or a Denis Gagnon sexy dress! Whatever you ever dream of!
Now, you know how to look smart while doing business with bankers. Just go for it baby, do it the gangster style. Do it like a New Brunswicker :0)
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