7 simple steps to increase your credit rating
If you're one of the many people with bad credit, you know how frustrating it can be. But don't worry – there are steps you can take to improve your credit rating.
Fortunately, in this blog post, A. Fisher & Associates through their site Debt Relief Canada share a few simple steps you can take towards increasing your credit rating. If you or someone you know is struggling financially, make sure to check out their site for advice on everything from ‘registered consumer proposals’ to rising interest rates.
Check out the simple steps that will help you boost your credit score rating below:
1. Check your credit report for errors
Credit reports are important because they show lenders how responsible you are with borrowing and repaying money. If you have bad credit, it can be difficult to take out loans or get approved for new lines of credit. That's why it's important to check your credit report regularly for errors. If you find any, dispute them with the relevant credit bureau. This can help rebuild your credit score and improve your chances of getting approved for new credit in the future.
2. Make all payments on time
One of the biggest factors in your credit score is your payment history. Lenders want to see that you're responsible with making payments on time, so it's important to do just that. Set up automatic payments if possible, so you never miss a due date. You can also set reminders in your phone or calendar to help you remember when payments are due.
3. Keep your credit utilisation low
Credit utilization is the amount of debt you have compared to your credit limit. It's important to keep this number low — ideally below 30% — because it shows lenders that you're not maxing out your credit cards and that you're able to manage your debt responsibly. If your credit utilization is high, you can try paying down your debt or asking for a higher credit limit.
4. Use a mix of different types of credit
Lenders like to see that you're able to manage different types of credit responsibly. This could include things like credit cards, store cards, car loans, and personal loans. Having a mix of different types of credit shows that you're capable of handling different repayment terms and interest rates.
5. Keep old accounts open
Closing old credit accounts can hurt your credit score. That's because it lowers your credit utilization and can shorten your credit history, two factors that are important in determining your credit score. If you have an old account that you don't use, consider keeping it open and using it occasionally to keep your credit history long and strong.
6. Get a secured credit card
A secured credit card is a good option for people with bad credit because it requires a deposit, which acts as your collateral in case you can't make payments. This deposit is usually equal to your credit limit, so it's a way for you to build credit without taking on too much debt. Just make sure to use the card responsibly by making payments on time and keeping your balance low.
7. Become an authorised user
If you have a family member or friend with good credit, you can become an authorized user on their credit card. This means you'll be able to use their credit card and build up your own credit history. Just make sure the account holder makes all their payments on time, so you don't end up with negative marks on your credit report.
Bonus Tip
8. Consider a credit-builder loan
A credit-builder loan is a type of loan designed to help people build their credit. It works by giving you a small amount of money that you then repay over time, typically in monthly installments. As you make your payments on time, you'll build up your credit score and show lenders that you're a responsible borrower.
Taking these steps can help you rebuild your credit score and improve your chances of getting approved for new credit in the future. Just remember to be patient — it takes time to build up a good credit history. And if you're ever in doubt, you can always reach out to a professional credit counseling service for help.
