Having a good credit score is critical for numerous reasons, and this is why everyone should know how to improve theirs. The steps to improving your credit score are similar whether you are starting from scratch, have a bad credit rating, or are new to Canada. Below, we cover the tips proven to help Canadians improve their credit score.
Get Some Credit
You won’t be able to improve your credit score if you do not have some credit to start with. This is why it is wise to get a credit card. You will need to use your credit card and manage your credit to build it up.
Whether you spend a lot or a little, using your credit card will make it much easier when you start applying for loans that can help you build wealth. For example, it is much easier to get a car loan if you have good credit.
Do not be discouraged if you are starting from scratch because there are credit cards specifically geared toward people who do not have a credit history.
Pay Bills On Time
One of the things that can tank your credit history once you start building it is overdue payments. These payments are included in your credit history and so it is important to pay your bills on time. A better credit history that shows you pay your bills on time is highly weighted when calculating your credit score.
If you are not the best with finances and often forget to pay your bills, many banks and payment options let you set up auto-pay. This feature deducts money from your account automatically to ensure you stay up to date with your payments. You can also set it up to pay the minimum amount so that even though you still have some unpaid bills, your history still shows that you paid some of it.
Life happens, and you might not always be able to pay your bills on time. In such a case, you could consider payday loans in Ontario. These loans are due on your payday, hence the name, and thus it is much harder to miss their payment.
Keep an Eye on Credit Utilization
Credit utilization is another weighted factor used when calculating your credit score. To ensure it helps improve your credit score, try using a third of the credit available to you. This means 30% to 33% of all the credit you currently have access to including credit cards and other lines of credit.
Having balances above this could lead to your credit score dropping.
Accept The Maximum Credit Available
To keep your credit utilization low, consider accepting the maximum credit amount available to you. However, remember to use only what you can pay because you do not want overdue bills on your credit history.
Keep your credit accounts in good standing and open for a long time to improve the length of your credit history, which will improve your credit score.
It might take some time to build your credit history, especially if you are new to Canada or have bad credit. However, it is doable if you complete the actionable steps discussed above.