Do you want to improve your credit score and achieve your financial goals? If yes, read this article for the most practical and reliable strategies!
How to build credit score in Canada
A good credit score is critical to low-interest rates and approval for loans and credit cards. However, if your credit score is low, you can follow these tips and tricks to improve it and get approval for loans and other products/services. So without further ado, let us discuss how to build or improve your credit score in Canada.
Check Your Credit Report
According to the Federal Trade Commission, one in five Canadians has errors in their credit reports, negatively impacting their overall score. That’s a massive number, meaning you must check or review your credit report every six months or annually to remove errors.
There are two credit bureaus in Canada. These are TransUnion and Equifax, and each provides you with a copy of your credit report. You can hire a professional service to achieve your goals if you don’t know how to identify and fix errors.
Pay Your Bills
You can improve your credit score in Canada by paying your bills on time. These include paying your credit card balances and reviewing your payment history. Remember, your history is a critical factor that impacts your credit score.
Late payments on your credit report mean negative information, directly damaging your credit score and preventing you from applying to mortgages, private loans, auto insurance, etc.
Make payments before they are due to revive your score. It is an excellent strategy for people who have previously missed paying their pills on time. We recommend automating your bill payments to streamline the entire process.
Avoid a High Credit Balance
Most credit reporting agencies do not like a high credit balance. A maximum credit balance is directly proportional to a low credit score. Therefore, measuring your credit is crucial via credit utilization ratio.
It enables you to measure your total credit and the amount you have used. You can ask for a credit limit increase and focus on lower utilization. The lower you utilize your credit, the higher your limit is. For instance, you will improve your credit score when you double your credit limit and cut your usage by 50%.
Use Your Old Credit Cards
Your credit history’s length is directly proportional to your credit score. So, you must not cancel your old credit cards even if you don’t use them frequently. According to Tarek Riman, a Montreal-based professional entrepreneur, keeping old cards and using them occasionally shows activity on your credit profile.
Consolidate Your Debt
In addition to paying your bills on time, consolidating your debt is critical. For example, if you have a substantial credit balance and find it daunting and time-consuming to pay your debts, you can use a low-interest balance transfer card.
The purpose is to save thousands of dollars and keep the interest low. We recommend Scotiabank’s low-interest balance transfer credit card in Canada or Value Visa Card with an interest rate of no more than 0.99%. Scotiabank’s card is an excellent option to keep the interest rates low for up to six months.
Your credit score in Canada affects whether you will get approval for loans, mortgages, auto insurance/loans, and credit cards. It also determines your interest rates and terms/conditions lenders assign during the approval process. Follow these practical tips to improve your credit score and streamline your finances. Until Next Time!
- Article based on personal opinion, experience and research.
- Photos from Unsplash & canva.