So, how important is your credit score anyway?
Well, when you consider your score can impact not only your financial health, but also your quality of life, it’s rather important.
Seem like an overstatement?
Consider what your credit score impacts – access to credit cards, loans, a mortgage, renting an apartment, car financing, opening a small business, better interest rates, lower security deposits, and more. They all hinge on the size of this three-digit number.
With so much importance placed on credit scores, it’s surprising that the majority of Canadians have never checked their score (If this is you, don’t worry. You can find out how you score with Equifax Canada or TransUnion).
Your credit score simplified.
Your credit score is represented by a number between 300 and 900, factoring in your payment history, level of outstanding debt, credit history, and how often you apply for credit. The higher the number a borrower has the better.
The average Canadian scores around 600, with numbers in the 700s. But, if your number dips toward the lower end, or if you just want to improve your credit rating, it’s all within your control.
Here are six ways to protect and improve your credit score.
1. Pay your bills on time.
Any late payment on your credit card can hurt your credit score. One of the best ways to ensure you don’t miss deadlines is to set up an automatic payment each month covering at least the minimum amount owing. The best practice is still to pay your bills on time and in full.
2. Spread out spending.
Yes, you have access to credit. But using up a high percentage of what’s available to you can affect your credit score. If there’s a chance you might get close to the credit card limit, consider spreading your spending over more than one card.
3. Try to pay debts quickly.
4. Ease up on credit applications.
Making too many credit applications within a short period can negatively affect your credit score.
5. Keep unused credit cards.
Not using all of the credit cards you have? Consider keeping unused credit cards at a $0 balance and using them for small purchases, and then paying off the balance,will reflect positively on your credit score. So don’t close them out unless it’s necessary.
6. Know your credit score.
If you don’t know where you stand when it comes to credit, how are you going to improve it? Access your credit score, take advantage of the many useful resources available online, and implement the best strategy to protect your credit score.
Your credit score can affect your life in many ways, so it’s best to be proactive to help ensure your score makes a positive impact. Contact your local credit union for more information on how to improve your credit score.
