Should I fix my bad credit and improve my credit score now?
It is always a good time to fix bad credit and improve your credit score! Credit has the ability to discern your quality of life by monitoring things like being granted a residential lease or buying a vehicle. Unfortunately, your credit won’t fix itself. There are some vital steps you need to take if you want to fix bad credit, and educating yourself is the first major step. These five tips will help you fix bad credit and improve your credit score fast.
1. Obtain a credit product
The only way you can prove to lenders that you’re responsible about paying back credit is to ensure that you’re using a product of credit. If you can’t get approved for new credit due to your score, there are options available for Canadians who have no credit, or a low credit history. Credit repair companies are a great way to show accountability to lenders and dedication that you’re willing to get your finances back on track.
2. Make payments on your credit
If you have multiple lines of credit that are all untilised till their maximum capacity, it can be stressful, especially after the holidays. However, if you don’t make payments on your credit, it will get worse. Payments should be on-time and at least the minimum should be paid. If you’re struggling with making minimum payments, you can research your options – consumer proposals, debt management programs or a debt consolidation loan could come into play for you.
3. Develop both installment and revolving credit on your file
There are two kinds of credit that are taken into account on your report – installment and revolving. Otherwise known as “mixed credit”, Canadians who have both installment and revolving credit on their file usually have a higher credit score compared to those who only have one or the other. Installment credit is a type of credit that has a term and a fixed payment (i.e. auto financing and personal loans). Revolving credit is any credit that is available to you even after you pay it off (i.e. credit cards or lines of credit).
4. Apply for credit carefully
Inquiries made on your credit file are not all the same. Soft credit inquiries do not affect your credit score and are only used for informational purposes like performing a background check, seeking an pre-approval for a loan, etc. Hard inquiries are made when a lender pulls your credit to verify your eligibility for a loan. Any hard inquiry made on your file could have an impact on your credit score, so it’s important to be mindful if you’re applying for multiple loans. Fortunately, the credit bureau counts all inquiries made for an auto loan within a 45-day period as one inquiry, so customers can discover options without having their score immensely impacted.
5. Track your credit score from Canada’s two major credit bureaus
Theoretically, over 56 per cent of Canadians have never checked their credit report. Your credit report is a precis of your credit history, and every time you borrow money from a lender it shows on your credit report. Personal financial history like missed payments, your SIN and any opened accounts can be accessed by lenders and financial institutions through credit reporting institutions. Besides many free credit report companies in Canada, you should also review the two major agencies, or credit bureaus in Canada, are TransUnion Canada and Equifax Canada. Your financial activity remains on your credit report for up to seven years, so it’s good idea to request a free copy of your credit report to examine your history and ensure that everything is up to date. Checking your credit report is also a great way to thwart any fraudulent activity on your file. Keeping an eye on your report could or could not get you approved for a loan.
It’s not too late to start building your credit! In fact, any time is a great time to start enlightening yourself about financial literacy. Check out Canada Auto Experts to see how we can help you establish good credit via auto financing or call 1-855-550-5565 to speak to our car loan specialists and credit specialists.