Improve credit score Canada

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Improve your credit score in Canada

5 Ways to Improve Your Credit Score in Canada

You wonder “how to improve my credit score in Canada” for a potential lender review? The smallest payment incident or late payment immediately impacts your credit score, while—conversely—it takes time to regain each point. Fortunately, there are strategies that can improve your bank credit rating and more quickly recapture an acceptable score in the eyes of financial institutions. Here are 5 ways to improve your credit score.

Simple steps to improve your credit score in canada

  • Pays your bills
  • Limit loan application
  • Use your credit card with caution
  • Consider a secured credit card
  • Check your credit score

Pay your bills on time

This is certainly the first step to follow to improve your credit score in Canada. Because while paying your bills on time every month helps you regain points, it especially lets you not lose any more of them.
Indeed, bills payments on time—at least the minimum amount due on your credit card or line of credit—is essential in order to not make the situation worse and to slightly increase your rating.

Limit your loan applications

When you are rebuilding your credit, you can find a loan with bad credit score but it’s going to be difficult.

Loan applications impact your credit score

It’s clearly advisable to monitor your credit history and limit your reliance on loans, but also to avoid filing large numbers of loan applications. Even if you don’t follow up on them, the simple act of filing multiple loan applications has an impact on your credit rating. It is therefore preferable to shop around, choose the most attractive offer, and then—and only then—authorize the selected banking institution to check your credit report in order to grant the loan.

Use your credit card intelligently

Paying with your credit card is a key factor that can help you regain points on your score, as long as you use it intelligently. Indeed, you should know that the card generates the most points when it is used up to one-third or even half of its limit. Beyond the credit card limit, credit agencies consider the user not to be a good manager of its credit card balance.

Apply for a secured credit card

If you don’t have a conventional credit card and you have a bad credit rating, you don’t have much chance of obtaining one. However, you can apply for a secured credit card.

How does it work?

This is granted to people with a score lower than 500 points if they make a deposit equal to the credit limit at the financial institution. This locks the amount in an account and thereby ensures that the purchases made with the card will be covered, even if you don’t pay your credit card bills. 

Once obtained, this card should be used like a traditional credit card in order to be useful and regain points. In other words, you shouldn’t exceed 50% of the authorized limit.

Check your credit rating annually

Although keep in mind that rebuilding your credit takes time, since negative information remains in the consumer credit report for 3 to 6 years, there are ways to regain some of your lost points in just 1 year. Also, if you cannot wait so long solutions exists to get a loan with a bad credit score. But rebuilding your credit lets you recapture the trust of lenders, and once you reach a certain threshold, you can apply for a conventional personal loan to make a real estate purchase, for example.

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