Luckily, raising your credit score is not as hard as it might seem, and it might not take as long as you expect.
Here are some steps that you can start taking today that could see you raise your credit score by 100 points or more in less than a year.
Will 100 points matter?
100 points is certainly significant. For example, a score of 580 is on the border between “poor” and “very poor.” By increasing your score to 680, you will be in the “good” range. Another jump of 40 points, to 720, brings you into the “excellent” credit score category. Not everyone has the same credit score, but the point is that if you increase your score by 100 points, it will make getting loans significantly easier.
How can you get started?
The first step is to check your credit score and to look at your credit report. The major credit bureaus in Canada are TransUnion and Equifax. You can do this online (fees may be charged) or by mail. This will let you know your credit score, and it will show you if there are any mistakes on your credit report (such as loans that you have already repaid). You can also see if you have any credit cards that you are no longer using.
Utilize your credit
Part of your credit score depends on credit utilization. That means you have to use credit cards in order to increase your score. This might seem counterintuitive, but it is not. You do want to use cards because the company will report this activity to the credit bureaus, which will raise your score. The key is to make smaller purchases and then pay them off as soon as possible. This will give you a higher credit utilization score without exposing you to more debt.
If you do not have a credit card, then you can perhaps apply for a secured credit card. This card requires a security deposit, but once you have made this deposit, you can use it just like a regular card to increase your credit score with small purchases that you pay off immediately.
Pay down your bills
Of course, the most difficult step in increasing your credit score is paying off your debt. You should focus on one account at a time when doing this, while making minimum payments on your other accounts. Start with the lowest balance account so that you can get that debt off the books quickly.
What if you need to borrow money while going through this credit score strategy? Remember, you want to only make purchases with your credit card that you can pay off quickly. Instead of using a credit card to borrow larger amounts, consider an online personal loans. These loans often do not require a complete credit check, so you can obtain them without a stellar credit score.
Do these things and you should be able to add 100 points to your credit score in a year or so.