Credit score refers to a numeric figure that represents your lending risk based on specific financial metrics such as income, debts, and previous loans. In Canada, you can get your credit score from any of the leading credit bureaus, including Equifax and TransUnion. Lenders and financial institutions like banks and insurers will check your credit score to determine the terms of services on things such as loans, mortgages, and insurance cover.
The higher your credit score, the lower your lending risks, and the better your chances of getting favorable loan terms. If your score goes below a certain threshold, some lenders may not be willing to lend you financial assistance at all. However, even with a poor credit score, you can still get installment loans Canada no credit check and no questions asked. But lenders like these are rare. So, to be safe, here’s how you can improve your credit score.
Pay Your Loans on Time
Paying your loans on time earns you favor with your lenders and the credit bureaus. Set reminders or work out a system to ensure all your bills, debts, mortgages, and loans are paid on time. Contact your lenders immediately if you think you might miss or delay a payment and figure out a way to address the problem without negatively affecting your payment record.
Diversify Your Borrowing Accounts
A diverse credit mix can favor your credit score significantly. Long term loans, such as student loans and mortgages, only account for a small percentage of the credit score. Adding more elements like business and personal loans to your credit mix can help raise your score. Just be sure that you can always repay the additional loans on time.
Don’t Close Old Accounts
Don’t close your old credit account, even if they happen to be dormant or irrelevant. Your credit history matters; a long borrowing history reflects positively on your credit score. If you have to close some credit accounts for whatever reason, it makes more sense to close newer accounts instead of old ones.
Building a good credit score takes time, don’t expect to start seeing any significant improvements overnight. Monitor your credit status at least once a year and keep finding more ways of raising your score.