Chapter 9 – Improving Credit

The majority of Canadian citizens have a credit score.  Scores can range from 300 to 900.  Anything above 680 is considered good credit and you can usually receive a full range of borrowing options.  Once you get below 600, your options will become more limited.
Your score is composed of a few different elements from the past 7 years:

  • payment history
  • amount of debt
  • history of credit (are you a new borrower or do you have a long credit history?)
  • types of credit (mortgage/visa/student loan)
  • types of credit you are pursuing
  • are you high maintenance?

Although you can’t expect to increase your score dramatically over night, there are a few things you can do to start:

  • If you are maxed out on debts, pay some off.  Lenders don’t want a client who looks like they are over extending themselves.   You can immediately improve your score by reducing your debt.
  • If you have NO debt, it is also bad.  No history is risky.  The BEST thing you can do to improve your credit is take out a visa, spend (under your limit) every month, and pay it off completely every month.  This shows that you’re responsible with a loan.
  • Try to avoid calling the credit companies and doing credit checks frequently.  Every time your credit score is pulled, it affects your score.  This is one advantage of using a mortgage broker, since we only pull your score once and submit it to all the lenders as oppose to having it pulled each time you apply at a different bank.
  • If you are constantly getting turned down for loans, it will show up on your credit score.  Choose wisely.

Any score can be repaired over time, but it makes a lot of sense financially to keep it high.  You will get the best rates when you need them.

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