Want a Better Credit Score? Do This FirstApr 27, 2018
Take if from our Licensed Insolvency Trustees (LITs), there’s no quick and easy way to fix your credit score or pad your credit history. It takes time, no matter what anyone tells you. But that doesn’t mean it can’t be done.
In this podcast, our LITs have an honest discussion about how your financial behaviour could be bringing down your credit score, and ways to improve it. Before you take on the long-term task of improving your credit score, you should get some financial habits in order. Here’s how.
Ask yourself what financial behaviours are negatively affecting your score
It’s time to get down to asking yourself the tough questions about your credit and debt behaviour. There are a number of common mistakes that could be keeping your credit score much lower than you’d like, such as:
- Missing bill or debt payments
- Making late bill or debt payments
- Defaulting on loans — debts sent to collection agencies will negatively affect your score
- Maxing out your credit cards, or using most or all of your available credit — the golden rule is to keep your credit utilization ratio at or below 30 per cent
- Having a consumer proposal or personal bankruptcy filing on your credit history
If you’ve been afraid to file a consumer proposal or bankruptcy because think it will ruin your credit forever, you should know that a consumer proposal will be removed from your credit history three years after you’ve finished paying off your debts. As for bankruptcy, that too will be removed six to seven years after you’ve been discharged.
That might seem like a long time, but if you continue to miss payments, make late payments, or borrow more to make ends meet (increasing your credit utilization ratio and risking default), you’re already lowering your score. And, you’ll have a long history of poor financial behaviour on your record.
Asking for help from a professional like an LIT is a positive step if you’re feeling financially pinched and impacting your credit score. An LIT can discuss your options with you, and help you make a plan to rebuild your credit.
Click on our podcast to learn more tips for rebuilding your credit history and increasing your credit score.