Tips for Raising Your Credit Score

From the day that you open your first bank account, take out your first personal loan or credit card, or begin a new job, you begin to build your credit. Credit scores play a large part when it comes to applying for any type of credit, including a mortgage. A score that is too low, damaged, or too new can mean being turned down for a mortgage. The good news is that you can raise your credit score and improve your chances of getting a mortgage approval. Our Kitchener mortgage broker team is here with some tips to help get you started.


What is a Credit Score?

Credit scores in Canada range between 300 and 900. The average credit score in Canada is 650. Credit scores that range between 760 and 900 are considered to be excellent, and between 660 and 760 are considered to be very good. Scored between 560 and 659 are in the fair range and anything under that is considered poor.

You can check your credit score using a free company, such as Credit Karma, or order a full report through Transunion or Equifax for a small fee. Knowing what elements affect your credit score is your first step in cleaning up your credit. Credit scores are calculated based on the following factors:

  • How long you have had your credit
  • If you carry a balance on any lines of credit/credit cards
  • If you have missed payments and how often this occurs
  • How much debt that you currently have
  • Your credit utilization ratio
  • If you’ve filed for bankruptcy
  • If you have debts that have been sent to debt collectors


Always pay bills on time

Having a history of missed or late payments is one of the biggest things that can impact your credit score. To make sure you don’t miss payments, you can set up monthly automatic payments with most companies.


Don’t take out credit that you don’t need

The mistake many people make is to take out every credit account that is offered to them, whether they need it or not. If you tend to apply for new offers quite a bit, this will lower your credit score. It can take a while for your credit score to rebound from this. Also, lenders that see frequent applications for credit on your history tend to see this as a red flag, because it looks like you are living beyond your means.

The other issue with this is that people who take out many credit accounts tend to close them just as quickly as they jump from one offer to the next. This can also impact your credit score because it affects the average age of your overall credit accounts.


Always pay off your debt

When you carry around a large amount of debt, it doesn’t make lenders feel excited about offering you more funds. Plus, you end up paying much more in interest by holding a large amount of debt. It’s important to pay these off as quickly as possible and shows lender’s that you can handle your debts efficiently. This will help raise your credit score over time.

It can take time to improve your credit score but is well worth the effort in the end. The same goes for building your credit score from scratch. Begin by researching what it is that is affecting your credit score, You can do this by reviewing your credit report. Make sure you always pay bills on time and don’t take out more debt than you need to. Stay on top of your budget and savings. This can help you pay your debt off quicker and makes it less likely that you will need to take out extra credit.


If you have questions about building your credit, give our expert Kitchener mortgage broker team a call today!

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