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How to Improve Your Credit
Score
Have at Least Two Active Reporting Credit
Accounts As a rule of thumb having at least two
active trade lines (credit accounts) for two years with a
minimum credit limit of $2,000, the 2/2/2 rule, will help
build your credit history and open up your mortgage
options. That being said if you do not have an
established credit rating some lenders will allow
alternative methods to proving your credit worthiness.
If you are new to Canada there are also mortgage
products available in this circumstance.
Get a Secured Credit Card If you are not able to get
a unsecured credit account get a secured credit card.
Since there's no risk to the lender because you've put
up the cash to cover your balance, secured cards are
great for new borrowers or people trying to re-
establish credit after a bankruptcy. Once you've
established your ability to manage the card you can
ask for the security requirement to be dropped and
your deposit returned.
Pay Down Credit Cards Pay down your credit cards
so you're only using 50% of your limits. Start by paying
down revolving credit accounts like credit cards as they
seem to have a more significant impact on credit
scores than car loans, lines-of-credit, and so on.
Limit the Use of Credit Cards Racking up a large
amount and then paying it off in monthly instalments
can hurt your credit score. If there is a balance at the
end of the month, this affects your score. Credit
formulas don't take into account the fact that you may
pay the balance off the next month. It is important
however to also use your credit as dormant credit
accounts will not improve your credit rating.
Check Credit Reports for Accuracy If your lender is
slower at reporting monthly transactions, this can
have a significant impact on how other lenders may
view your file. Ensure everything is up to date on your
credit report as old bills that have been paid can come
back to haunt you. Credit reports can be ordered
through both the Equifax and Trans Union websites.
You also have a right to dispute any inaccuracies
directly with the credit agency yourself.
Don't Apply for Too Much Credit at Once Don't
lease a car, open a new credit card and apply for a
loan all in the same month or two. The credit bureau
may see this as a sign of financial difficulties. Also be
aware of being pre-approved by several lenders before
you're ready to buy. You can check your own credit
report without penalty however, credit inquiries from
lenders may count against your credit rating
Keep Old Cards Older credit is better credit. If you
stop using older credit cards, the issuers may stop
updating your accounts. As such, the cards can lose
their weight in the credit formula and, therefore, may
not be as valuable. You should use these cards
periodically and then pay them off. To keep the card
active set up your monthly bills such as you phone bill
to be automatically charged to your credit card. This
way you will be utilizing your credit card with bills that
are required to be paid monthly.
Don't Let Mistakes Build Up You should always
dispute any mistakes or situations that may harm your
credit. If, for instance, a cell phone bill is incorrect and
the company will not amend it, you can dispute this by
making the credit bureau aware of the situation.