Improve your credit rating

Tips for improving your credit rating

People with no credit history are typically those who are students, people that just graduated from college or people starting over after a divorce.  If you fall into this category, the first step in improving your score is to begin establishing a positive credit history as soon as possible.  By establishing a positive credit history now, you will ensure that you will receive a good credit score when it comes time for applying for your first mortgage or other type of loan.

Pay all bills on time. Avoid late payments and skipped payments. Some consumers find that arranging for direct payments, makes it easier to stay up-to-date.

Don’t max out your credit cards or lines of credit. Credit scores look at the total amount of debt you have. Plus they compare that debt to the total amount of credit available to you (for instance, the total of the credit lines on your credit cards). Carrying too much debt relative to your available credit will usually affect your score negatively. Moving debt around from card to card, won’t help improve the picture, nor will closing unused credit card accounts or opening new accounts. Paying down debt is best.

A history of established credit is good. A track record of managing credit over a longer period works in your favour. But if you are just starting out, your payment history and low balances can offset your lack of a record.

Get help if you experience or anticipate financial difficulties. If a financial crisis has struck or you see one looming, taking steps to manage the problems responsibly can help you avoid greater financial difficulties. Appropriate credit counselling can help.

Act responsibly. Know your financial limitations. Understand how your monthly income relates to your monthly bills and debts. Don’t spend out of your bounds.

Open a chequing account. This can be your first step in establishing a positive financial history.

Begin your credit history by applying for a major credit card, such as Visa, MasterCard or American Express.  If you’ve been rejected for a major credit card, try applying for a secured credit card, which is a great “starter” card. With a secured card, you put a predetermined amount of money in an account to secure your card.

Don’t overdraw your bank account. This is not a good start to your credit history. It will reflect negatively on your credit report.

Keep your purchases low enough so that you can pay off your bill in full each month.

If you move, be sure to change your name from all the utilities. Don’t let others take over your payments. These accounts are in your name so any late payments will be recorded on your credit file.

Like your job and where you live. Stability is a good thing for credit. If you’ve been in your current home for four years or longer, and with your current employer for five years or more, you rack up points.

Keep at least one account in good standing. Even if you filed for bankruptcy or have a bad credit history, don’t lose hope. Stop spending for six months and then concentrate on keeping at least one of your credit accounts in good standing. If you don’t have any credit cards left, you can still get approved for a secured credit card. This is a great way to rebuild your credit.