How to Build and Keep a Good Credit Score
22 Feb 2023
Whether you'd like a mortgage or you are applying for an apartment, a healthy credit score is critical.
How Do I Improve My Credit Health?
- Pay your bills on time, every time.
- Don’t use too much of your available credit
- If your financial institution offers you higher credit limits, accept the increase but keep utilization low. This will improve your credit usage rate.
- Be aware of the activity on your accounts and monitor for inaccuracies, fraudulent acts and that your payments are going to the right accounts.
- Limit applying for new accounts to reduce hard inquiries.
- Keep old accounts open to increase credit history length.
- Use credit wisely – don’t go over your limit.
What Makes Up My Credit Score?
1. Payment history. This is the biggest factor in calculating your credit score. Late or missed payments have a significant impact.
2. Credit utilization rate. Lenders like to see a credit utilization rate below 30%. Divide the amount of used revolving credit by the amount of credit available.
3. Credit age. Keep credit accounts open even if you don’t use them to offer the longest track record possible.
4. Credit mix is holding a variety of accounts like credit cards, student loans, utilities, and a mortgage loan.
5. Amount you owe is the sum of all your credit debts. Keep it low and show lenders you pay them off.
6. Hard inquiries. If you have made many requests for credit from lenders, this will affect your score and may cause flags to go up. Causing suspicion that you are trying to get more credit than you can handle.
How Do I [Re]build My Credit?
Speak with your bank or financial planner to make sure you are rebuilding with the right product. Not all credit card companies are regarded equally. Here are some options to help you (re)build.
- Secured credit cards: (you make a deposit upfront, typically the same amount as the credit limit)
- Student Credit Card: look into what products are available to students.
- Authorized user: a parent, spouse or family member adds you to their account but you benefit from making on-time payments
- Co-Signer: a person who agrees to be legally responsible for the debt.
- Utility or Phone payments: can be reported to credit agencies to help build your track record.
Have you been a victim of Identity theft? Or maybe you simply lost your wallet? To protect yourself, make a police report and contact the credit agencies: Equifax, TransUnion and Experian. Do this even if you think recovery is hopeless.
Want to learn more? Call me or visit:
https://www.equifax.com/personal/education/credit/score/how-to-improve-credit-score/
https://www.transunion.ca/build-credit
