The Holistic Approach to Increase Credit Score in Canada
So you found out your credit score and it’s not exactly where you want it to be? Let’s talk about how to increase and repair your credit score the right way, and make sure that you can get a nice and high score and could keep it there.
Low credit scores are results of mismanaging money and becoming unappealing to lenders. Now, this is usually triggered by missing or late payments, running up credit, among plenty of other reasons. And these triggers are typically extensions of your habits and financial actions.
Now, we totally understand that there are excruciating circumstances that knockdown credit scores, but for most people reading this that is not necessarily the case and this is more just a result of poor spending habits and not managing your money properly.
So you can try some ways to temporarily bump up your credit score or pay someone to go fight some credit score battles for you, but unfortunately, you’re not going to be fixing the core problem. Now, if you’re ready to take your credit score to a whole new level the right way then be with us and keep reading.
Try to make payments on time:
The first thing you need to do and this should come as no surprise, to increase your credit score in Canada is that you pay your agreed-upon payments on time every time. Obviously, this includes paying off your credit cards or other loans and chipping away at student loans, for example.
But it also includes making sure you pay your rent phone bills and other utility bills on time as well because if you miss these utility type bills, then they can impact your credit rating adversely. Since your payment history makes up 35% of how your credit score is calculated, that is a major thing to take care of first making sure you pay your bills on time every time.
Have a critical eye on your credit balance:
The next Pro-tip is to make sure that you watch your credit balance. Since the second-largest impact on your credit score in Canada is your credit utilization rate. You know that you want to keep your credit balances as far away as you can from your credit limits.
Creditors prefer to see people keep their utilization rates below 30%. So if you have a credit limit of $5,000 and you currently have $4,500 charged to it, then your credit score is getting slammed because your rate is at 90%.
But conveniently if you improve your financial habits and you can make your payments on time and start paying down the money you borrowed in the past, then not only is that going to help your payment history, but it’s also going to reduce your credit utilization rate and that’s two ways that you increase your credit score all at once.
Opt for the option of credit limit increment:
Another way, you could improve your credit utilization rate would be to get a credit limit increase. But there are a lot of other things to take into consideration before doing that. So if that’s of interest to you, let us know in the comments and we can assist you on that.
But for now, I’m not going to touch that and I just want you to focus on making sure that you get your payments in order and that you’re reducing your balances away from your credit limits.
Limit new accounts, abrogate if needed:
Whenever you open an incipient bank account, you are enduring two shots to your score: one for a credit request and a second for lowering the average age of your accounts. There is no problem in opening an additional account particularly in the event that you have older accounts to balance things out, but simply don’t go over the edge.
If you have a more incipient account you no longer plan to utilize, closing it is probably better than keeping it active to expand your normal credit age. You’ll additionally have one less account to manage.
Ken your Credit Score, quite often:
Lastly is to go and check your credit history and you can do that by getting your free credit report. A credit report is useful because it shows you the past two years of inquiries to your account, so the credit score checks or the “hard pulls” that impact your account, but also it shows you a seven-year payment history that you’ve made. And that’s important for two reasons:
- The first reason why it’s important is that you can check through your credit history to find if there are any information inaccuracies. So let’s say you made some payments they were counted as late, but you know you made them on time. If you find that happens then there are ways to fight that as well.
And what’s handy is that in your report, you’ll usually get a nice little file like this which is an investigation request form and you can fill that out or you can call them or you probably do it online As well to launch the investigation to solve any discrepancies in your credit history.
- The second important reason why it’s important to check your credit report is that if there’s been any fraud with your accounts if someone has your information and got a credit card and it’s just racked up a bunch of bills that they haven’t paid you can find that.
Now, if you are launching an investigation about anything in your payment history, then make sure that you’re collecting a lot of proof based on whatever the situation is to see that that is, in fact, the case.
“Knowing is half the battle”. When it comes to credit scoring, it seems to be a perfect phrase. If you get daily updates of your score, you are significantly more spurred to increase your credit score whenever it is low. You’ll additionally ken whenever it drops and can take action to redress the quandary right away.
Its high time you increase your credit score:
I want you to know that time, of course, is the best healer for your credit score as you improve your financial habits; you’ll see that your credit history starts improving getting a lot healthier and that’s what lenders like to see. And of course, as time goes on after about the seven-year marked bad information falls off of your account so you can repair it over time.
Wrapping it up, you just don’t worry if your score fluctuates – that’s mundane. It will go up and down naturally as long as you will utilize your credit facility. Even a similar credit agency can generate credit reports with different scores, depending upon who is demanding them. They utilize various techniques and calculations for various enterprises.
Don’t forget to check out our article on What is a good credit score in Canada?
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