Credit card companies and banks look at your credit score while making the decision to lend you money. Your credit score reflects your ability to return credits. It is a number that depicts the likelihood of you repaying money without struggling.
Lenders check your credit history in order to calculate your credit score in Canada. If your credit score is low, they will see this as a risk for lending you money. Different companies have different criteria to assess the level of risk by looking at your credit score.
There are many things that can damage your credit score in Canada, such as delayed payments of bills, applications for a large number of credit cards, etc.
In case of a low credit score, you should first check the information available in your credit report. That information must be correct. If not, contact the responsible authorities. If the information is correct, the next thing you should be doing is thoroughly and carefully reading the report to assess what factors are causing a decrease in your credit score and how you can improve them.
Here are a few tips that can help you improve your credit score in Canada.
Pay your bills on time
You should always be careful about the time you take to pay your bills. Delayed payments of bills can negatively influence your credit score in Canada. Although your credit report does not have records of the payments of your utility bills such as phone, electricity, and cable, there are some mobile phone companies that may inform the credit-reporting agencies about your late payments, which could negatively affect your credit score.
Clear your debts quickly
You should be looking to pay off your debts as soon as possible. Prolonged and accumulated debts have a bad influence on your credit score in Canada.
Be watchful of your credit card limit
Avoid going overboard with your credit card expenses. Do not cross the credit limit on a credit card, no matter what. Your balance should always be well below the limit of your credit card. Higher balance has more chance of affecting your credit score in Canada.
Prioritize the payments you have to make
Canadian credit reports do not generally include mortgage payments, although they are very important. So, it’s smart if you prioritize clearing your credit card, lease, and loan payments first and on time. This will help you maintain a good credit score in Canada.
Limit your credit applications
You should be careful about the number of applications you make. You must avoid making too many credit applications. Too much inquiry from the potential lenders about your credit can negatively affect your credit score in Canada. However, the credit score is not affected if you have queries regarding your own credit report.
Have a credit history
One of the reasons for one’s low credit score in Canada is the absence of credit history. Make sure that you have a proper record of the debt you owed and the payments you made back. Credit history can be built using a credit card.
Maintaining a good credit score is important and has its benefits. By implementing the above-mentioned tips, you can ensure a better credit score in Canada.