Improve Your Credit Score
In Canada, your credit score plays a major role in your financial health, influencing everything from your mortgage rate and insurance rates to the interest rates you’ll be able to get on a credit card or car loan. Your credit score may even be considered when you apply for a job! Here are some tips on improving your credit score.
- Get a free credit report. Your credit score is only as good as your credit report, and getting a copy is easy and free. You can get a free copy by mail once a year by contacting one of Canada’s credit bureaus:
- Evaluate your credit score. If it’s 700 or higher, you’re above average. Anything below about 680 reaches the point at which lending institutions begin raising rates and denying credit. If your credit rating dips below 700, take steps to improve it, such as the following:
- Dispute any errors and omissions on your credit report. You can ask to have a paragraph explaining your side of the story added to your report. To correct negative or incorrect information, send a dispute form, along with supporting evidence. Forms are available online, or by calling the credit bureau. Never send original documents and always track your submissions using certified mail or a similar service.
- Apply for fewer loans and credit cards. When you apply for a loan or credit card, the lending institution typically orders an inquiry that shows up on your credit report. Evidence that you’re applying for a number of loans or credit cards in a short period of time can make you appear as if you’re grasping at financial straws. Have no more than two credit cards per spouse.
- Pay off your credit card balance, or at least part of the balance. Your balance should be 50 percent or less than your available credit limit.
- Add good information to your report. You can request that each of the three agencies add information to your file. Although they’re not required to do so, they often do if they can verify the information. Focus on missing positive account histories, even if the account is closed. Also add information that explains or corrects potentially negative information.
- Check your credit report annually. Don’t assume that credit reporting agencies will add or permanently correct information on your report. Sometimes your corrections inadvertently disappear. Review your report at least annually, and more frequently if you plan on applying for a large amount of credit.