LEAVE OLD DEBTS ON YOUR CREDIT REPORT
You can’t improve your score if you don’t have any credit to begin with. Young people and new Canadians often run into this problem because they are just starting to establish themselves financially.
It’s a good idea to keep old credit accounts open because the longer your history of using credit responsibly, the better. Having an old debt that was paid off as agreed can be a boost for your overall credit score.
CORRECT ERRORS IN YOUR CREDIT REPORT
It’s a good idea to check your reports at least once a year to make sure all of your information is right. If you notice any errors or incorrect information, contact the credit bureaus and ask for a correction. Errors could include someone else’s information in your file, debts listed that aren’t yours, debts that have been paid in full and incorrect payment history.
INCREASE YOUR CREDIT LIMIT
A lot of folks think that Increasing your credit limit just means giving yourself the opportunity to spend beyond your means. But, not necessarily. Increasing your credit limit can have a number of upsides if you manage your credit wisely, but mainly it will lower your overall credit utilization and increase your score provided you keep your utilization low and make your payments on time.
PAY YOUR BILLS ON TIME
Punctuality is key, as they say — in life and in credit repair. Your payment history accounts for roughly 35% of your credit score. If you are regularly making late payments on your credit cards or student loans, your score is going to take a big hit.
SET UP AUTOMATIC PAYMENTS
If your credit score is suffering due to past missed or late payments, you should consider setting up automatic payments for those debts that have fixed payments. This includes, but is not limited to student loans, personal loans, mortgages and car loans. This way you’ll never forget to pay a bill again, which can seriously hurt your credit score.
USE YOUR CREDIT MORE
This tip might seem counterintuitive, but one of the best ways to repair your credit score is to use your credit more often. Credit is built on your ability to use credit and pay it back responsibly, which shows you are able to manage your finances. Continue using your credit as long as you are able to repay it on time.
OPEN A SECURED CREDIT CARD ACCOUNT
One way to build your credit history is by opening a secured credit card account. This kind of account require a deposit upfront, but can be used like a regular credit card. A secured card is good for someone with no credit history or a poor credit score who may have a harder time getting approved for a credit card or a loan.
KEEP A LOW CREDIT CARD BALANCE
Keeping a high balance on your credit cards is not good practice. Maxing out your credit cards month-after-month and not paying them off can affect your score because credit bureaus compare how much credit you use to the amount of credit you have available. As a rule of thumb, it’s a good idea to keep your credit to less than 30% of your available credit. For example, if your card has a credit limit of $2,500 you should only be using $750 of that each month.
MONITOR AND REQUEST A COPY OF YOUR CREDIT SCORE
You can get free credit reports from the two largest credit bureaus in the country, Equifax Canada and TransUnion Canada. Simply send in some basic information and wait two to three weeks for your report to arrive in the mail. You can also get access it immediately online from both companies for a small fee.
Your three-digit credit score is the most important number in your report because it gives you a picture of the overall health of your credit. Your report includes a lot of additional details about specific accounts, which can be overwhelming to sift through if you’re not sure what you’re looking for. The Government of Canada has a great online explainer and sample credit reports so you can figure out those other numbers (and sometimes letters) mean.