How to Boost Your Credit Scores

Why should I care about my credit score?

Lenders use your credit scores to decide if they should approve you for a loan. A higher score increases your chances of approval and a lower interest rate. Creditors also consider factors like your job, income, and bank balances.

Different lenders use various credit scores, including those from Equifax and TransUnion.

Source: creditcardgenius.ca

If your credit scores needs improvement, here are some steps you can take:

• Check Your Credit Reports:

  • Review reports from Equifax and TransUnion to spot inaccuracies or signs of fraud.

  • Pay off outstanding debts and address any past-due accounts.

• Pay On Time:

  • Timely payments significantly impact credit scores.

  • Use automatic payments or set up alerts to avoid late payments.

• Manage Credit Utilization:

  • Keep your credit utilization ratio (credit used vs. credit limit) low.

  • Aim for a ratio at or below 30% by spending less, making frequent payments, or requesting a credit limit increase.

• Limit New Account Applications:

  • Applying for new credit leads to a hard inquiry, impacting scores, especially for lower scores.

  • Reduce new account applications to improve scores.

• Keep Old Accounts Open:

  • Don't close paid-off old accounts, as they contribute to the "average age of accounts" factor.

  • Maintaining open accounts helps preserve your credit history length.

How Long Does it Take to See Changes? Improving your credit score takes time and patience. The duration varies based on factors like late payments or hard inquiries. Overcoming certain negative factors may take longer than others. There's no quick fix; consistent effort is key.

It is also important to understand how credit scores are calculated.

Source: creditcardgenius.ca

And did you know you can get a FREE credit report?

Yes, you can, and YOU SHOULD. This is the best way to be certain that all your personal information reported to the credit agencies (also known as credit bureaus) is correct and up to date. Checking your score periodically also helps spotting signs of identity theft or fraud faster.

Link: Equifax Free Credit Report

Link: TransUnion Free Credit Report

You can also access your credit scores and credit reports for FREE on websites like Borrowell and Credit Karma.

Know your rights: Financial Consumer Agency of Canada