A poor credit score can hinder your chances of getting into your first home or your dream home. If you have a “decent” but not optimum credit score, a lender will compensate for the risk by offering you a higher interest rate, which means higher monthly payments on your mortgage.
Here’s how to repair and improve your credit score and keep it healthy:
Get a credit report.
The first step on the road to recovery is to get your report from the 2 main credit bureaus in Canada that collect and share data about how you’ve used credit in the past – Equifax and Transunion, and identify any errors in your borrowing history. These companies have been known to make mistakes. Finding mistakes and resolving will make a huge difference to your score.
Consolidate your debt
If you are dealing with out of control debt, it makes sense to evaluate your accounts and consolidate your debt. Developing a repayment plan is a good idea as it shows the financial institution that you are taking steps to remedy the situation.
Make your payments on time.
Paying bills on time, even if it is just the minimum payment, is one of the most important things you can do to improve your credit score. Late payments are very serious. Don’t make your payment exactly on the due date as with some financial institutions and companies, your payment may take a few days to process.
Contact the financial institution for late payments
If you do have a problem making a payment or if you cannot meet the minimum payment, contact the financial institution concerned and inform them. They will not penalize you if you are frank and open with them.
Maintain low balances on your cards
Maintaining a low outstanding balance in relation to the borrowing cap on a credit card or line of credit will help improve your rating. Owing 50% or more of your credit limit has a negative impact on your credit score.
Put boundaries on your spending behavior.
Ready to jump into the market? Whether you are looking to buy, sell, or learn more about the market changes, reach out to our team today! We’ll help you make the right move!