When you’re young and first getting approved for a credit card in Canada, you might not immediately think about the repercussions of late payments or accrued debt. When the time comes to purchase a vehicle or a home, having a good credit score is imperative to securing loans or being approved for a mortgage. Whether you have a negative or decent credit score, there is still room to improve and gain a better score. Here are a few things you can do to improve your credit score in Canada:
Increase the Limit on Your Credit
Increasing the spending limit on your credit cards can be tempting, especially when you’re eager to make a large purchase or pay off existing debts. Of course, if you have a difficult time managing your budget, a credit increase may not be the wisest decision, but if you’re frugal and careful in your spending habits, it could work favourably for you. When you refrain from spending close to your limit, credit companies will consider you a non-risk when it comes to paying back debts. Limit your spending, and you will improve your long-term credit utilization.
Ensure You Don’t Miss Payments
This is an obvious point, but one that needs to be restated, nonetheless. Although missing a payment once in a blue moon will not cripple your credit score, chronic late payments will undoubtedly hamper your ability to obtain pre-approved mortgages or loans. More than 30% of your overall credit score is comprised of your ability to pay your dues punctually. Essentially, if you pay your debts before they are due, you will be setting yourself up for a great credit score. If paying back your debts on time is an issue for you, as it is for many Canadians, our next tip will help you avoid that scenario.
Arrange Auto Payments
Whether you forget to pay your bills or dread moving money out of your account to pay off your credit cards, many Canadians rely on auto payments to help them stay responsible for their dues. Whether you’re paying for your cable & internet, your cell phone bill, your hydro bill, your mortgage or your insurance, auto payments can be arranged so that funds are routinely taken from your account at the same day each month. Auto payments are hassle-free and prevent you from missing your due dates.
Your credit score will help you secure many essential purchases. Between securing a loan for a vehicle or being pre-approved for a mortgage loan, it is important to represent a credit score that lenders find trustworthy and liable. Taking steps to increase your credit score is paramount; therefore, by refraining from spending up to your maximum credit limit, paying your debts on time, and by setting up automatic payments, you will notice an improvement in your overall credit score. For more information, reach out to Mortgage Forces today! We can’t wait to help you.