Your credit score plays a crucial role in securing affordable financing for major purchases like vehicles, homes, and more. The higher your score, the better loan terms and lower interest rates lenders can offer. This guide provides key steps Canadians can take to boost their credit scores quickly and save money on financing.
Order Your Credit Reports
The first step is to review your current credit reports to understand where your score stands today. Visit Canada.ca and request your free credit reports from Equifax and TransUnion.
Examining your reports identifies any errors dragging your score down, accounts in collections, late payments, or other negative items. Knowing your credit history helps focus improvement efforts
Check Your Current Credit Scores
Higher scores qualify you for the best loan and credit card interest rates saving you thousands over time. If your scores need work, implementing improvements now can quickly boost your ratings.
Pay All Bills on Time
One of the quickest ways to improve your Canadian credit score is simply paying all bills and debts on or before their due dates. Payment history makes up a major part of your score calculation. Set payment reminders, automate payments, and stay organized to maintain an on-time payment record. If you’re currently late, get caught up and stay current moving forward.
Pay Down Balances
Carrying high balances on credit cards and revolving debt hurts your credit utilization rate, a key score factor. Work aggressively at paying down balances to get utilization below 30%, ideally below 10%. Even redistributing high balances across multiple cards boosts your utilization. Reducing balances demonstrates better credit management.
Avoid Closing Old Accounts
While closing unused cards seems beneficial, it can actually lower your score temporarily. Keep old accounts open, especially those with perfect payment histories. The average age of your credit history accounts makes up 15% of your score calculation. Keep long-standing accounts open and active.
Limit New Credit Applications
Each new credit application triggers a hard inquiry on your report that temporarily dings your score a few points. Limit new applications to only essential financing needs for the next 6-12 months while improving your credit. Too many new accounts in a short period raises potential red flags with lenders. Keep new applications to a minimum while boosting your score.
Fix Any Errors on Your Reports
If you spot any incorrect personal data, late payments, or other errors on your credit reports, immediately dispute them with the bureaus. Submit dispute letters citing the inaccuracies identified. By law, the credit bureaus must investigate and remove any information confirmed erroneous. Fixing errors boosts your score.
Build Your Credit History
Being new to credit with a limited history also lowers scores. Over time, responsibly handling accounts – like credit cards, auto loans, and lines of credit – gradually builds your score as your history lengthens. Avoid closing your oldest accounts since longevity helps. If new to credit, be patient – responsible use over time builds your score.
Diversify Credit Types
Carrying different types of credit – including installment loans, revolving accounts, and consumer credit cards – improves your history diversity, another score factor. Work at adding established auto loans, personal loans, or a secured card over time to prove you can manage diverse credit types responsibly.
Limit Credit Inquiries
Hard credit inquiries when applying for new credit remain on your reports for 12-24 months, temporarily impacting your score a few points. Limit applying only for essential needs to avoid accumulating too many inquiries in a short period. Too many inquiries over a year suggests higher risk since it appears you’re desperately seeking new credit. Space inquiries out over time.
Monitor Your Credit Reports
Ongoing monitoring ensures any inaccuracies get spotted and disputed quickly before they sink your scores further. Periodically review reports from Equifax and TransUnion for late payments, collections accounts, or identity theft indicators. Many credit monitoring services also provide useful educational materials on maintaining and improving your credit.
Boost Your Financing Odds
Following the steps in this guide positions you to potentially improve your Canadian credit score significantly in 6-12 months. Higher scores mean better approved loan terms and thousands in interest savings when seeking financing for major purchases. A bit of work now provides ongoing benefits for big purchases down the road. Use these tips to boost your credit rating today!
Let the experts at Get Approved Canada Help
With decades of experience helping Canadians get approved for loans and credit even with poor credit histories, Get Approved Canada can assist you in taking the right steps to boost your credit score while navigating the financing you need.
Our dedicated loan specialists will work closely with you through every step of the process to analyze your reports, identify improvements, guide your credit boosting efforts, and match you to financing options best suited to your unique situation.
Don’t let a low credit score keep you from achieving your dreams. Contact Get Approved Canada today to get started building a brighter, debt-free future. The sooner you get started, the sooner you can gain access to affordable financing options!