How to Improve Your Credit Score in Canada
Navigating the world of finance can be challenging. Understanding what affects your credit score, how to improve it, and knowing which scoring category you fall into are essential steps towards demystifying your financial landscape.
At Coterie, we believe everyone deserves a better, healthier relationship with money. Here’s how you can take action to boost your credit score and get closer to your financial goals:
Check Your Address History
Ensure your address history is accurate with credit bureaus like Equifax or TransUnion Canada. Correct any discrepancies promptly.
Remove Old Financial Connections
Sever ties with ex-partners or former housemates you shared accounts with. Their poor credit could be dragging yours down.
Never Miss a Payment
Missing payments, defaults, and judgments can affect your credit file for up to six years. If you have a valid reason for missing a payment, consider filing a Notice of Correction to explain the situation to future lenders.
Pay Off Your Debts
Paying off debt can be tough, but it’s crucial for improving your credit score. Each milestone in debt repayment not only boosts your score but also your mental well-being.
Limit Hard Checks
Aim for no more than one hard credit check every six months. While soft checks don’t impact your score, hard checks can cause temporary dips. These occur each time you apply for new credit, like a credit card or loan.
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Get Invited to a Community: Receive an invitation to join a community that matches your financial objectives and interests.
Remember: Lenders can’t see your credit score. They have their own rating systems based on your credit history and other factors to decide whether to lend to you.
What Affects Your Credit Score?
Now that you know how to improve your credit score, here are some tips to maintain and enhance it:
Spread Out Your Credit Applications
Limit yourself to one hard credit check every six months to avoid negative impacts on your score.
Keep Up with Payments
Missing payments can lower your score and harm your credit history.
Maintain Low Debt Levels but High Available Credit
Lenders prefer low credit utilization, which means using only a small portion of your available credit.
Keep Your Oldest Credit Card
Keeping your oldest credit card open shows a long history of responsible credit use. If you need to close accounts, don’t choose the oldest one. Learn how credit cards can help build your credit score here.
Build Your Credit History Over Time
A long, consistent credit history is beneficial. Lack of historical credit use can negatively impact your creditworthiness.
