Posted on Wednesday 06 January 2016
That low credit score ruins everything, doesn’t it? For so many Canadians it can feel like such a ball and chain. Forever holding you back from lower interest rates and overall, just better financial opportunities. Forget about buying a home or even renting a nice place, your bad credit score could even keep you from landing a decent job.
While this doesn't seem fair, it's just how things work in some parts of the world. Within Canada and all across British Columbia a poor credit score will certainly make things little bit harder for you. While it isn't hard to raise your score, there are things you can be doing to improve your credit rating over time.
2021 is the year to take your finances seriously and get back on track with a strong credit score. Trust us, your future self with thank you immensely for it.
How To Improve Your Credit Score
Although improving your credit card score requires sometime, there are definitely some things that you can do right now to get going right away. These few tips should make a positive dent in your score fairly quickly:
Never exceed 40% of your credit limit. If you do happen to go over, pay at least half of the balance off every month. It goes without saying but don’t miss your repayments. Setting up a direct debit for the whole balance (Or even the minimum repayment) each month can prevent this from happening.
While it is important to not live above your means, a wise move would be to open up multiple credit card accounts. If you apply the 40% rule to each of your cards, it help you improve your credit rating much faster as it will prove to your lenders that you can effectively manage multiple credit lines.
However, only get multiple credit cards if you have a very stable source of income.
Or this plan may backfire and make things even worse.
Another simple step is to check your report for errors.
Errors can come from identity theft, to an additional charge (System error), to a simple clerical error, but all can negatively affect your score. You can always dispute an item on your credit report, but fixing your credit, whether your fault or not, will take time to correct. It’s just how the system works.
Create Good Credit Building Habits
The real work comes with setting up good credit building habits that you can reap the benefits from over time.
Pay more than what you have to
Paying more than the minimum each month will demonstrate that you’re a trustworthy consumer. Some borrowers even use a short term loan with My Canada Payday to pay back their loans in full.
Especially when they don't have too much owing 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
If you've used more than 50% of the credit on a specific card, and it happens to be a high-end one, do your best to pay it off as soon as possible.
These kinds of actions show that you're not just living on credit, but rather building up your credit. In other words, lenders will see you have income and are using it in a very responsible manner.
Which will further inspire confidence in them.
Sign as an authorized user for your dependents
If you have dependents who are trying to build credit, signing with them can help not only them build credit, but it can help you repair your own minor mishaps as well.
As long as they are responsible, and pay their bills on time, this will bring some positive reinforcements to your current credit situation as well.
A co-signer with good credit is always looked highly upon.
Pay more than once a month
You can pay twice, or even three times a month on your credit card if you want to.
The more you pay on these forms of debt, the better your credit report will look. Don't place yourself under financial duress to meet a goal like this, but if you can, definitely do so.
Get rid of unpaid collection items
There are many Canadians facing credit drops due to unpaid collection items, versus things like late payments and only paying minimum payments on debt. If you can find a way to consolidate collection debt, it might help you get rid of it sooner, thus improving your score.
If you follow even just a few of these tips, you'll see improvements in that credit score sooner rather than later. Make 2021 the year you begin tackling debt and getting your finances on track.