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How Can I Improve My Credit Score?


Credit scores are designed to show a consumer’s creditworthiness and the likelihood that they will be able to pay their debt on time. In Canada, credit scores range from 300 to 900 and are used as a tool by the creditors to determine who is a good candidate to borrow money.

A low credit score can affect the eligibility for future purchases, mortgages, and loans. Therefore, it is very important to build and maintain a healthy credit rating. There are several factors that come into play to calculate a credit score.

Here are 3 helpful tips to help you start improving your credit score:

  1. Maintain a good payment history: Your payment history is one of the most important factors in determining your credit score. Paying your bills on time is essential in building and maintaining a good credit rating. This includes paying your credit cards, utility, internet bill, etc. promptly and consistently. The longer the history you have paying bills on time, the stronger your credit score will be. If you have several credit cards and monthly payments, set up payment reminders on your calendar so you never miss a payment. Setting up pre-authorized payments is another way to make sure that your bills get paid on time. It is very important not to miss any due dates as bad payment patterns will show up on your credit report.

  2. Keep your Balance-to-Limit ratio low: The amount of credit you have borrowed compared to your credit limit is another important factor in determining your credit score. High credit usage lowers your score and is a strong sign of credit risk for future creditors. Higher balances are more difficult to afford and hence could indicate that you have overextended your credit. On the other hand, low credit usage is an indication that you are a responsible consumer and can responsibly manage your debt. Check balances on your credit cards regularly and try to use less than 35% of your credit limit. For instance, if you have a credit card with a $1,000 limit try to keep the outstanding balance below $350.

  3. Build credit history: The length of your credit history is also important in building good credit. Give yourself time and start to establish a long history of paying your bills on time and using credit responsibly. Try to keep the oldest account open to lengthen your period of active credit use. Think twice before closing an old account as having an “older” credit history can be very helpful for your credit score. More established accounts show that you have a lot of experience handling credit responsibly. Also, it is usually not a good idea to open several new accounts at the same time since opening new accounts can lower the average “age” of your credit.

Remember, achieving a good credit score does not happen overnight. It might take months or even years to build and maintain a healthy credit rating. If you have a low score, do not stress over it, instead, start to make better financial choices and try to manage your credit more responsibly.

If you would like to discuss your credit score and how it may be impacting your financial situation, we are here for you. At Sheriff Sole & Madej Inc. our commitment is to find the best solution for you. Learn more about Consumer Proposal and Bankruptcy. Call us at 1-844-482-3328 to book a free confidential consultation. We offer services in 12 convenient locations throughout the Greater Toronto area with staff members that speak over 7 different languages.


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