Taking Financial Ownership

How Do I Improve My Credit Score?

Written By Rachel Surman, Borrowell


We get asked this question all the time at Borrowell. But the answer is always the same: the first step to improving your credit score is knowing your score and what goes into it.

A recent study we conducted among our customers found a positive relationship between the frequency of credit score monitoring and credit score increase over time. We also found that customers with lower initial scores when they signed up for Borrowell’s free credit monitoring service tended to improve their scores the most.

To help you get your rating in a good to great place, check out these 9 tips to help you increase it.


1. Pay Household Bills On Time

Paying your bills on time is one of the best things you can do. This behaviour shows potential creditors that you’re financially responsible. Different creditors have different grace periods, so it’s important to make sure you pay them when they’re due.

Missed payments can have a seriously negative impact on your credit score. If you have any past due accounts, make sure to pay the oldest ones off first.


2. Pay Off Your Credit Cards

Did you know the average Canadian carries over $22,000 in credit card debt? You can prevent your account from being charged interest by paying it off each month, which will save you money.

Unexpected events can happen and you may not be able to pay your credit card bill in full each month. However, whenever possible, make it a habit to pay off your cards as quickly as you can.

If you do pay your credit card in full consistently, most credit card providers will allow you to set up automatic payments to be debited from your bank account. It’s a great way to make sure you never miss a payment.


3. Pay More Than The Minimum Payment

If you do carry a balance on your credit card, you should try to pay more than the minimum payment. This will help you pay off your balance much quicker.

Paying more than the minimum decreases your credit utilization rate, or the percentage of a consumer’s available credit that they’ve used. A low credit utilization rate can help improve your score.


4. Under-Use Your Credit Card

Creditors look at the amount of credit you have available and the amount you have used. Keeping the balance on your card low looks great on your credit report.

The goal is to keep your credit utilization below 30%. This means that if you have a credit card with a limit of $3,000, you should try to keep the balance below $1,000.


5. Raise Your Credit Limit

You might be thinking, “Wait, what?” about this one. Although it may seem counterintuitive, you should consider asking for a raise on your credit limit. Note: this could require a hard credit check, which will slightly impact your credit score.

Credit card providers may offer you limit increases. These don’t require hard hits, so the increase will only positively impact your credit score.

If you keep your spending the same but increase your credit limit, then you will decrease your credit utilization. For example, if you increase your credit limit from $3,000 to $4,000 and keep your balance at $1,000, then your credit utilization will decrease to 25%.


6. Be Cautious When Seeking Additional Credit

Applying for new credit may be a hit to your credit file and can decrease your credit score. Additionally, if you apply for different types of credit in varying amounts in a short amount of time, then this may raise a red flag with your financial institutions and the credit bureaus because it looks like you’re seeking more and more new credit.


7. A Long History of Accounts

If you have had a credit card account that you have not used for years, then you may be thinking about closing it. However, you should occasionally use your credit card and pay it off. A long credit history looks favourable to creditors.


8. Mix It Up

Variety is the spice of life! The type of credit you are using can help you improve your score. There are two types of credit, instalment and revolving. Credit cards are an example of revolving credit, and a personal loan is an example of an instalment loan.

You can improve your credit by showing your ability to manage both types of credit. If your credit card utilization is high, taking out a debt consolidation loan to pay off your credit card balances can reduce your utilization and improve your credit score.


9. Monitor Your Score and Report

Keeping an eye on your credit score may  help you obtain a better score. But checking your credit report is equally as important! Your credit report contains important information about your credit profile, including credit inquiries, credit utilization and credit account history.

Your credit report can provide insights into why your credit score is the way it is. You can get your free credit report from Equifax here.


About Borrowell: Borrowell helps Canadians make great decisions about credit. With our free credit score monitoring, personal loans and product recommendations, Borrowell provides the tools to help you improve your financial well-being and be the hero of your credit. Join the over 500,000 Canadians who have received their free credit scores! Learn more.

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