You look at your credit report with disappointment. The score is not great. You were hoping to have a score in the highest range, but instead, you’re sitting in the middle at the “fair” section — or worse, in the “poor” section.
Your credit score impacts your ability to make major financial decisions. Having an undesirable score can make it harder to buy a house, rent an apartment, get a new car and apply for another credit card. Your interest rates will be higher. Your down payments will be bigger. If you don’t want that low score to follow you everywhere, here is how you can build it up:
Tackle Outstanding Debt
Outstanding debt will make a huge dent in your score, and you won’t be able to make that number rise substantially until the debt is tackled. If you owe money for multiple credit cards, you should pick the one with the highest interest rate and start paying it down first. Then move on to the next one.
It’s possible that your debt is too large to fix with simple budgeting. In that case, you should see a licensed insolvency trustee to discuss the possibility of filing for a consumer proposal or personal bankruptcy. These solutions will sit on your report for several years, but they will also help you resolve an overwhelming amount of outstanding payments. You should click here for more info about these types of debt-relief so that you can see what option works best for you.
Don’t Max out Your Card
Your credit card may have a maximum, but that doesn’t mean you should reach it every month. Having a high balance at all times makes you look financially irresponsible, and your score will reflect that. Paying down your credit balance and staying well-below the limit will improve your rating over time.
If you don’t know how to cut down on your credit spending, you should see a licensed insolvency trustee for financial counselling services. Some professional guidance could make a big difference.
Make Payments on Time
One of the best ways to improve your credit score is to make all of your payments on time. Don’t leave it for a few extra days or weeks. You can either set up automatic bill payment with your bank or download a bill reminder app like Bill Watch or Mint to make sure that the important dates don’t slip your mind. If you don’t have enough to pay the full fee, you should at least contribute the bare minimum.
Check for Errors
An easy tip for repairing your credit score is to find and fix any errors that are sitting on the report. Small errors dealing with factors like work or borrowing history could hurt your score. If you notice anything wrong with your report, contact the credit bureau and have them correct it as soon as possible.
A bad credit score doesn’t have to be forever. With hard work and determination, you can hoist that number from the red zone into the green zone. In time, your score will open up financial opportunities for you, instead of creating barriers and closing doors.