How to Build Your Credit
A good credit score is essential for financial health and securing favourable lending terms. Which can lead to lower interest rates, better mortgage options, and increased chances of loan approval. Building a robust credit history not only opens doors to financial opportunities but can also provide peace of mind for future investments, such as buying a home.
Here are a few tips to help prioritize your credit score 👇
Check Your Credit Report
Start by requesting a free copy of your credit report from major credit bureaus in Canada, such as Equifax, Credit Karma, and TransUnion. Those platforms allow you to view your credit history, open accounts, closed accounts and credit inquiries. They also update monthly.
Identify Errors
Look for inaccuracies or discrepancies in your credit report. Dispute any errors you find with the respective credit bureau to have them corrected.
Pay Bills on Time
Ensure that all bills and credit payments are made on or before the due date. Timely payments positively impact your credit score.
Reduce Credit Card Balances
Aim to keep your credit card balances below 30% of your total credit limit. Lowering your utilization ratio can significantly boost your score.
Establish a Good Credit Mix
If possible, maintain a mix of credit types, such as installment loans and revolving credit (like credit cards), which can enhance your creditworthiness.
Limit New Credit Applications
Avoid applying for multiple credit accounts in a short period, as this can lead to hard inquiries that may lower your score.
Maintaining Old Accounts
Keep older credit accounts open unless there is a compelling reason to close them. A longer credit history can positively influence your score. Your phone bill longevity is great for this!
Set Up Automatic Payments
Use automatic payments for recurring bills to ensure they are never missed, which helps maintain a positive payment history.
Monitor Your Credit Regularly
Stay informed about your credit status by monitoring your credit score and report periodically to ensure it reflects your financial habits accurately. Review where your money is going, set up a budget or limit expenses.
Consult a Credit Counsellor
If you are struggling with managing your credit, consider reaching out to a certified credit counsellor for guidance on improving your credit situation. Building and maintaining a good credit score is essential for financial health.
Those are a few ways to help increase your credit score. Always speak to a professional and do your due diligence regarding your finances.
Source: Government of Canada