6 Ways to Tidy-up Your Credit Rating
Updated: Mar 21, 2021
When you need to improve your credit, there's no better time than now to acknowledge the importance of your credit score and check if your habits are in line with a healthy rating. To get started down the path to improved credit score there are a number of things you can do:
Here are SIX ways to improve your Credit Rating Starting Today!
Pull Your Credit Report
For many people, a credit score is one of those things that get consider after we actually need it. Most people have no idea where they stand when it come to their true credit rating. If you don’t then this is often a good time to find out out! The Fair Credit Reporting Act allows you to get one free credit report once a year through Equifax or TransUnion. Pulling your own credit report ends up in a “soft” inquiry on your report and will not affect your credit score.
If You Discover Errors, Dispute Them Asap
When doing your annual credit review, it's good practice to closely analyze it line line-by-line and make sure there are no errors. If you discover any errors, report and dispute them immediately as they might be affecting your score.
Consolidate Your Loans
Among one of the the most effective tips for managing your credit and striving towards future financial success, is to consolidate your debt. Consolidating debt means reducing multiple loans to one monthly payment, which generally contains a lower rate allowing you to maximize the amount paid back against the principal amount while reducing the cost of borrowing (paying less toward interest).
Once you have put in the work to into cleaning up your credit, it is a good idea to do whatever you can to keep it that way! I’d like to prove a few simple but effective tips for maintaining your better credit rating and maximizing your financial future:
Pay Your Bills
This seems pretty simple and is common sense, but it's not always that easy. You not only must pay the bills, but you've got to try and do so in full and ALWAYS on time, every time. Paying bills on time is one amongst the key behaviors lenders and creditors will be monitoring when deciding to grant you a loan or mortgage. If you're unable to afford the total amount, a simple tip is to at least make the minimum payment which will be shown on your monthly statement. Doing so will usually stop any flags from showing up on your account.
Pay Your Debts
Whether you've got Mastercard, visa, Amex debt, a car loan, line of credit or a mortgage, the goal should be to pay your debt off as quickly as possible. To make the biggest impact in a short period of time, start by paying the lowest debt amounts first and only after that, work towards dealing with the larger amounts. By removing the low debt items not only improve the number of debts you have but you will also remove the interest payments on those smaller loans which will free-up money allowing you to direct more funds toward paying off larger debts.
Stay Within Your Limit (lower actually)
This is a key item which few are aware and it is key when managing debt and maintaining a decent credit score. Using all or most of your available credit is never advised. advised. Your goal should be to use less than 70% of your total available credit. As an example, if you have got a limit of $1000 on your MasterCard, you must never exceed $700 which is 70% of the total credit available on this borrowing source.
NOTE: If for some reason you want to have more credit available, it's better to raise the limit versus utilizing over 70% of what's available.
Whether you qualify for a mortgage through a bank, credit union, private lender or other financial institution, you must be aiming for a credit score of 680 for a minimum of one borrower (or guarantor). If you're able to start your home-buying journey, or are looking to refinance your existing mortgage, a Mortgage Broker can facilitate your review your credit score and financial information to insure you get the best opportunity and the best mortgage for your situation. Certainly, if your concerns about your credit rating are driven by a need for a new mortgage, refinancing or mortgage renewal, then your best bet is to contact a mortgage broker who will be able to make additional suggestions on things you can do to improve your rating.
Doug Paterson, Mortgage Agent
Dominion Lending Centres.
416.432.8836 | www.dougpaterson.ca