9 Fast and Easy Ways To Boost Your Credit Score
Of course, good credit has always been necessary when it comes to buying a home. However, the CMHC’s announcement of tighter rules for mortgage applicants means it’s now more important than ever to improve your credit score before seeking a mortgage loan.
Here are our top nine tips:
Pay Your Bills On Time, Every Time
We know we may be stating the obvious, but paying your bills on time is 100% the fastest way to make a big impact on your score. Start by setting up automatic payments and be sure to tackle any late or delinquent bills ASAP. Here too, if you can make micropayments (smaller payments more often), it will help you improve your credit utilization – bonus!
Open a New Card…
We know we just said paying down your debts should be priority one. However, opening a new card can actually help improve your credit score by a) keeping your credit mixed (more on that below) and b) lowering your utilization ratio.
…And Keep Existing Cards Open
Here too, it’s important to keep your existing cards open as the “age” of your credit history is also a factor. Closing cards can affect this history, as well as your overall credit limit, so it’s best to keep them available. If you must close accounts and cancel cards, start with the newest ones first.
Tip: Make a habit of using dormant cards (then immediately paying off), to make sure they remain open.
Apply For Secure Credit
Secured credit is a great alternative is you’re having trouble applying for a conventional card or loan. With this approach, the lender will require you to put a deposit down on the loan or card “securing” that the balance will be paid, even if you default.
Become an Authorized User
If you have a family member or friend with a stellar credit card history, you many want to consider becoming an authorized user. In this scenario, the holder will add your name to their account, giving you permission to use their credit (or simply help you improve yours by granting you authorization).
Check For Any and All Errors
Even the smallest mistake on your credit report can have a negative impact on your score. And, because creditors make mistakes too, it’s important to scour your report for any hidden errors. Start by ordering your free credit report and score and take care to dispute any inaccuracies.
Raise Your Limits
Once again, it’s all about credit utilization. By raising your limits, while keeping your current balance the same, you lower your utilization rate. Keep in mind however, an increased balance shouldn’t equal increased spending!
Tip: Avoid any limit increases that require hard credit checks
Mix Things Up
Establishing credit across a variety of different sources (i.e. credit card, car loan, line of credit, etc.) can be a good thing as it gives you a more complex credit profile. So, when lenders look at your credit, they get a better sense of your payment history and ability to manage your finances and loans.
Keep a Close Eye on Your Progress
Despite popular belief, checking your score won’t lower it. And since a good score can make all the difference in helping you obtain your next mortgage loan, we recommend keeping a regular eye on things. According to experts, you can check your score through the credit bureau, your bank, or a free credit scoring site (if applicable).
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