Improving Your Credit Score: Tips for Canadians
The most important actions you can take to boost your credit score in Canada (and your attractiveness to lenders) are the following:
Obtain copies of your credit reports. You’re entitled to receive a free copy of your credit report annually from the two main credit bureaus in Canada (Equifax and TransUnion). You can obtain a credit report for free by requesting it by mail.
Be sure your credit reports are accurate. Correct errors and be especially sure to get accounts removed if they aren’t yours and they show late payments or are in collection.
- Ask to have any late or missed payments that are more than six years old removed. Ditto for a bankruptcy more than six or seven years ago.
Pay all your bills on time. To ensure on-time payments, sign up for automatic bill payment, which most companies (like phone and utility providers) enable you to use.
Be loyal if it doesn’t cost you. The older the loan accounts you have open, the better for your credit rating. Closing old accounts and opening a bunch of new ones generally lowers your credit score. But don’t be loyal if it costs you! For example, if you’re carrying credit card debt at a high interest rate, it may pay to transfer that balance to a lower-rate card. If your current credit card provider refuses to match a lower rate you find elsewhere, move your balance and save yourself some money.
- Limit the number of debt and debt accounts. The more individual loans — especially consumer loans — that you hold, and the higher the balances, the lower your credit score will be.
Work to pay down consumer revolving debt (such as on credit cards).