Posted on Wednesday 06 January 2016
That low credit score ruins everything, doesn't it? For so many Canadians, low credit scores can be a chain holding you back from getting lower interest rates, and even worse, better financial opportunities. Asides from making it difficult to buy a home or rent a nice place for yourself, a bad credit score can even keep you from landing a decent job.
While this may appear unfair, it's how things work. A poor credit score within Canada and all across British Columbia, a poor credit score will likely make things harder for you, except with a payday loan lender such as My Canada Payday. If you are wondering if there are ways you can change your low credit score, the answer is yes. Certain steps can help improve your credit score and increase your financial prospects.
More than before, 2021 requires good financial management, and the way to get on track is through a strong credit score. Improving your credit score requires time, but there are proven tips to improve your credit score. Here are a few to get you on track:
Never exceed 40% of your credit limit.
How much you exceed your credit limit tells in your overall credit performance. A safe bet is to keep it under 40%. If you happen to go over this, pay at least half the balance off every month. You should not miss your repayments. Because dates can be difficult to keep track of, a good way to avoid delays in your repayments is to set up a direct debit for the whole balance (or even the minimum repayment) each month.
While it is important not to live above your means, unforeseeable circumstances may occur. A tip that can help you stay on track is to open up multiple credit card accounts. If you apply the 40% rule to all your cards, your credit rating can improve faster. Also, it helps to prove to your lenders that you can effectively manage multiple credit lines.
However, you should only get multiple credit cards if your source of income is very stable. For a person with a shaky source of income, this plan may backfire and make things even worse.
Check Your Credit Report For Errors
Errors can result from identity theft, an additional charge due to system error, or even simple clerical errors. Regardless, they can negatively affect your score. It is easy to dispute an item on your credit report, but fixing your credit, whether this is your fault or not, will take time to correct. This is simply how the system runs.
Create Good Credit Building Habits
The real work comes with setting up good credit-building habits that will reap benefits over time. Your day-to-day habits are the bricks that build your credit. Conscious spending, a good saving culture and a balanced financial philosophy contribute to this. While you must understand the importance of investing, you need to also ensure you can afford the risks.
Pay More Than What You Have To
Paying more than the minimum on your debts per month will position you as a trustworthy borrower. Some borrowers even use a short-term loan with My Canada Payday to pay back their loans in full. This works especially when you don't owe too much in the first place. Whatever way you choose to make your repayments, it's a great idea to keep good relationships with your lenders.
Pay Off Your Card With the Highest Credit Limit
Again, there are unavoidable situations where a 40% limit may not work. So, if you have to use more than 50% of the credit on a specific card, do your best to pay it off as soon as possible, even more so if it is a high-end credit card.
This will show that you are not merely living on credit but rather building up your credit. In other words, lenders will see you have income and use it responsibly.
Sign as an Authorized User for Your Dependents
If you have dependents trying to build credit, signing with them can help build their credit score and, more importantly, fix yours. A co-signer with good credit is looked highly upon.
Therefore, if the dependants are responsible and pay their bills on time, this will positively reinforce your credit situation.
Pay More Than Once A Month
You can pay twice, or even thrice a month, on your credit card.
The more you pay on these forms of debt, the better your credit report will look. However, don't place yourself under financial duress to meet this goal. The point is to do it if you can afford to.
Get Rid of Unpaid Collection Items
Many more Canadians face credit drops due to unpaid collection items compared to late payments and minimum debt payments. Consolidating your collection debt will make them easier to pay and get rid of collection item debts sooner. This will be very helpful in improving your score.
However, there are frustrating situations where you may be neck-deep in debts. In cases like this, your credit score may be impossible to improve through any means other than simply paying down the debt. The most effective way of getting rid of such debt is to seek free Canadian Government grants to pay off your debts.
Scaling your finances is largely dependent on your credit score. To record quick improvements in your credit score, utilizing some of the tips above will prove largely helpful. So, make 2021 the year you begin tackling your debts and get your finances back on track.