Advice for Improving Credit Scores

Rebecca Awram - Vancouver Mortgage Broker

Anyone who has ever been granted credit will have a credit history. Your creditors send monthly updates to the credit bureau, and this data forms your credit history and your ‘beacon’ score. It creates a permanent record regarding what you owe, what your minimum payments are and whether or not you pay your debts in a timely fashion. Data is typically kept on the record for 6-7 years, including collection items (paid or unpaid), public records, consumer proposals and bankruptcies.

Credit scores influence many things

Credit Score, report and historyA good credit history is important, as not only does it strongly affect your ability to borrow money, it also heavily influences the interest rate that the lender will make available to you. It can also affect you in other ways, such as a landlord refusing to rent you a place to live because of a poor credit history.

  1. You have the right to see your credit report, so be proactive and check your credit file online with Equifax and Transunion, the two main credit bureaus in Canada. Find out the areas for improvement, and also if there are any errors. Mistakes are not as uncommon as you’d think.
  2. Pay your bills on time! So incredibly obvious, yet so very important. Even one or two late payments per year can have a strong downward impact on your score.
  3. Avoid excessive credit checks. Multiple hard enquiries can have a negative effect on your score. Checking the score yourself online or through the mail is a ‘soft’ enquiry and has no impact on your credit file. Mortgage brokers will pull your credit once, and use that for multiple submissions to different lenders – a clever strategy!
  4. Abstain from spending over 70% of your credit card limits in any given months, even if you pay it off in full every month. And absolutely never go over limit.
  5. Even if you pay all your bills on time, it is a liability to have a lot of credit extended to you. It hurts your score, even when you aren’t using it. Avoid applying for extra cards you don’t need, especially if it’s just for that great ‘introductory’ rate!
  6. When cancelling cards you no longer want or need, try to keep the ones with the longest account history. That’s an asset!
  7. Collection records are bad news! If you are disputing a debt, and the collector is threatening sending it to a collection agent, try to stop that from happening. It doesn’t matter whether you are right or wrong, once it’s on your credit bureau, it is very time consuming to have it removed. Especially if it’s for a small amount, consider if it may be wiser to pay the debt and then continue your dispute to have it refunded.

Talk to a mortgage broker for more information

Rebecca Awram, a mortgage broker serving the Greater Vancouver and Fraser Valley area, offers complimentary credit counselling to all her clients. Phone her at 604-614-2382 or email her anytime to find out more!

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