How To Improve Your Credit Rating in Canada While Staying Out of Debt

Everyone should focus on achieving a good credit rating in Canada.

There are many reasons why having good credit is important, and the main one is that it lets you have access to more credit in the future.

People with poor credit scores often get loans with bad interest rates – or don’t get accepted at all.

If you’re looking to make a big purchase – like buying a house – then you need an excellent credit rating to get the best deal on a mortgage.

Being in debt is one of the most significant credit rating concerns.

It can lower your score and looks bad when you apply for any loans or credit cards.

So, here are some tips that will help you improve your credit rating in Canada without ending up in debt:

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Avoid applying for too much credit

Credit applications have a direct impact on your credit score.

The more applications you have, the lower your score will be.

Why?

Because it looks like you are too dependent on credit as a source of money.

The more payments you have, the more at risk you are.

Keep your applications to a minimum and only apply for credit that you genuinely need.

Get a credit card and use it smartly

This brings us to the next tip – apply for a credit card and use it wisely.

Credit cards are a good form of credit as they can be used to build your rating up.

The trick is to use them responsibly to show that you’re a trustworthy lender.

One idea is to set up a direct debit on your credit card every month.

It could be for a subscription, a bill, anything.

Then, create a standing order that stipulates you pay the entirety of your credit card bill each month.

This is the smartest way to build credit as you keep your credit card payments low and pay off your balance in full.

It proves you can pay your debts, raising your score.

Keep an eye on your bank account

Learning how to manage your bank account is key to both avoiding debts and raising your credit score.

Effectively, you must ensure there’s enough money in your account to make regular payments.

If there isn’t, then you can often end up with bounced payments or dip into an overdraft.

Bounced payments have a negative effect as they show that you have failed to pay a bill.

Your overdraft is technically a form of credit, so you’re borrowing more money yet again.

Neither of these things makes you seem very creditworthy.

Pay everything in full, on time

Lastly, be sure you make all your payments in full, as they are due.

This includes all your household bills, phone contracts, subscriptions, etc.

Paying things on time is a surefire way to elevate your credit rating and stay out of debt.

Follow this advice to improve your credit score.

If you are suffering from debt issues and your credit rating is faltering, then we can help.

Contact us today or fill in one of our online evaluation forms for debt relief advice and guidance.

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