CREDIT CARD BASICS : How to Improve Credit Score
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How to Improve your Credit Score

Your credit score is a little number that has a significant amount of influence when it comes to matters of personal finance. It’s what will determine if you get approved for a credit card or not, if you qualify for a line of credit, or if you can get a mortgage and at what rate.

Your credit report is updated every day and recalculated continuously.


Here are a few tips on how you can improve your credit score and keep it on the high side:

Tip #1: Know Your Number

First things first, you need to know what your credit score is and if it’s not pretty, what’s causing the problem. A credit report will tell you your credit history and current credit outstanding.

Two of the most popular credit bureaus in Canada are Equifax and TransUnion. Visit one of these sites to request your free credit report Now. For a small fee you can also get your credit score.


Tip #2: Pay Early

Always pay the balance or the interest owing on your debts a few days before it is due. That way, if the due date falls on a Sunday or holiday, you don’t have to worry about the payment clearing late and this appearing on your credit report.

Tip #3: Don’t Max Out Your Debt

A good rule of thumb is to keep your debt levels below 50% of your available credit. If you’re over this ratio, pay some off or consider taking out another credit card. And make sure you never go over your credit limit – the Credit Gods really don’t like that!

Tip #4: Avoid an Influx in Credit Requests

Avoid applying for credit unless you have a genuine need for a new account. If you end up applying for a few different credit cards in a short period of time (the sign-up discounts offered on store cards can be enticing), or if you’re searching for a mortgage and trying to get pre-approved by a few different lenders, the credit bureaus will likely start to think that you’re in financial trouble and your number will drop.

Tip #5: Check your Number Annually

You should check your credit score once a year to make sure there are no mistakes on your file or that you haven’t been a victim of credit fraud. The Credit Gods are not perfect, so if a mistake happens it’s your responsibility to fix it.

Tip #6: Give it Some Time

If you have poor credit, just remember that as time goes on (if you pay your bills on time and use a wise amount of debt), your score will eventually improve. It just might take a few years.

A credit score is only one criterion that a lender will use in making decisions. For example, if you are looking for a mortgage, the lender will also take into account the property being purchased, the homeowner's equity and annual income.


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