Written by Kate Broddick   |   Posted on   |   259 views

1. Be Aware of What Your Current Credit Score Is

In Canada, credit scores can range from anywhere between 300 (poor) to 900 (excellent). Your credit score helps lenders assess how likely you are to pay your bills and your loans on time. The higher your score, the more likely you are to get approved for loans and credit. The lower your score, the less likely you’ll be able to secure credit and it will definitely make it harder to get a mortgage.

Your credit may also be checked when applying to lease a property. Landlords like to do credit checks on potential renters because they like to see that you’ll be responsible enough to pay rent on time.

According to Equifax—which is one of the largest credit rating bureaus in Canada—a credit score of 660-712 is considered fair while a credit score of 713-740 is considered “good to very good”. If your score is above 740, you’re in the excellent range. Simply put, the higher your score, the better your rating.

Equifax and Transunion are two private companies that assess people’s credit ratings. To do this they look at public information from banks, collection agencies and credit card companies. They also look at your history of paying bills on time (like utility bills, cell phone bills, loan payments etc.). If you would like a copy of your credit report, you can request a free copy every 12 months from Equifax and Transunion and there will be no impact on your credit score. 

PROFESSIONAL TIP: Don’t request a credit report too often. Believe it or not, if you or a lender request a copy of your credit report multiple times a year, this can lower your score. 

3. Aim to Pay All Your Bills on Time

You would be surprised at how much a late payment will affect your credit rating. Everything from cell phone bills, cable and internet bills, credit card bills and more will all play into the score you receive, and if you’re late even once, your score will be changed.

Try to pay your bills on time and in-full in order to maintain a good repayment history. This is the best way to boost your credit score and you’ll save on late-payment fees and interest payments. You may even consider pre-authorized payments from your bank so every bill gets paid automatically from your bank account.

If you can’t pay the full bill, at least try to meet the minimum payment. And if you absolutely can’t make any repayment whatsoever, contact the lender to potentially work out different payment terms.

One of the best ways to ensure that your bills are paid on time is buy not over-spending on your credit cards and just buying what you need and can afford. If you’re constantly behind in your bills and racking up your credit card with late payments, your credit rating will reflect this behaviour.

5. Don’t Use All of the Credit Available to You

Be aware of your debt-to-credit ratio (also known as your utilization ratio). This is the amount of debt you have vs. the amount credit limit available to you. The Government of Canada recommends a ratio of 35% or less on credit cards, loans and lines of credit.

Anything higher than 35% may indicate that you’re a higher-risk borrower. Lenders see borrowers who use a lot of their available credit as a greater risk. For example, if you have a couple of credit cards that allow you a $20,000 credit limit, and you have $14,000 of debt on those cards, your debt-to-credit ratio would be 70% – something that may look risky to future lenders.

Being aware of this ratio is crucial and keeping it low is another key step towards improving your overall credit rating.

Kate Broddick

Real Estate Sales Representative, Team Leader

kate@teamkate.ca
519-774-6664
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*All information provided by the Brantford Regional Real Estate Association (BRREA) for the highest sales volume and highest number of completed transactions since January 1, 2015. All Brantford MLS® House Listings come from the various systems operated by Real Estate Boards and Associations across Canada. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used underlicense. The trademarks MLS®, Multiple Listing Service®, and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.

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