Improving Your Credit Score

Posted on 07 February, 2019

Following last week’s post about credit score myths, we thought we would cover one of the most commonly searched topics about credit scores: how they can be improved. While there are ways to increase your score, don’t be fooled by companies that claim they can fix your credit immediately. Rebuilding your credit is a process that will take some time. Understanding the key elements that Canada’s two reporting agencies (Equifax and TransUnion) use to determine your score is the absolute best way to start moving in the right direction.

Use your Credit

Having a credit card that you do not use will not help improve your score; lenders want to know that you have the ability to pay back borrowed funds. However, using too much of your credit is one of the worst things you can do for your score. Even if your balance is paid in full by the due date, utilizing a large amount of your available credit makes you look like a greater risk to a potential lender.

A good number to aim for is to use less than 35 percent of all of your available credit. For example, if you have a credit card with a $10,000 limit - aim to use $3500 at most.

When it comes to your monthly payments, be sure to always pay your bill on time. If there are extenuating circumstances and you anticipate that you will be paying your bill late, contact the lender to let them know as soon as possible.


Use Different Types of Credit

Assuming you are diligent with making your payments and you are not overextending yourself financially, having different types of open loans will actually help improve your score rather than just having one. An auto loan, line of credit and credit card are all examples of different types of loans that can help.


Credit Checks

There are two types of credit checks that agencies refer to as either “hard hits” or “soft hits.” Soft hits occur when you request your own credit report, and this is how credit reporting websites are able to provide you with your score without damaging it.

Hard hits, on the other hand, will impact your credit score negatively - particularly if there are many hard hits made within a short period of time. For example, any time you apply for a credit card or auto loan would be considered a hard hit and would temporarily impact your score. While your score would not be impacted by an inquiry after one year, they remain visible on your report for two years.


When you come into our office for a complimentary mortgage consultation, our certified Brokers are able to pull your credit information on the spot and can give you advice about what to expect and how to best move forward. To book your consultation, contact our office today!


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