If you want easy approval for loans and credit cards, you should get an excellent credit score to lower your rates. However, the question is how much time a bank account holder needs to improve their credit score. The period varies and depends on the level of your credit score. If you have a bad credit score, you may adopt a few simple strategies and implement them to boost your credit score in no time. However, before you should know the tips to get a fair score, you should know what is credit score in Canada.
Credit Score in Canada
A credit score consists of 3 digits provided by TransUnion, Equifax, or any other credit bureau to lenders and other parties who want to access their creditworthiness. These are mortgage lenders, banks, utility providers, insurance companies, and potential employers.
Credit Score and Remarks in Canada
A credit score in Canada may be anything between 300 and 900. Simultaneously, credit score remarks may be poor, fair, good, very good, and excellent based on the following rankings-
|Credit Score/Points||Credit Score Remarks|
|800 to 900||Excellent|
|720 to 799||Very Good|
|650 to 719||Good|
|600 to 649||Fair|
|300 to 599||Poor|
If your credit score in Canada is anything from good to excellent, you may easily get approval for credit cards and loans. Besides, you may qualify to involve in competitive rates. If your credit score goes to a fair category, lenders may mandate you to pay sub-par rates. On the other hand, if you have a poor credit score, lenders may deny or reject your credit card or loan outright.
Tips to Increase Credit Score in Canada
Inspect Your Credit Score and Credit Report Thoroughly
One of the best ways to improve a credit score is to regularly request for annual free credit report and read it thoroughly to detect any errors. According to the law, credit bureaus in Canada must provide a copy of a credit report yearly at the request of a user. Furthermore, Borrowell in Canada offers free credit reports with credit scores per week or month.
Hence, you must check your credit report and credit score to deem a soft inquiry. A few common errors on a credit report are inaccurate status, wrong personal information, and hard and unauthorized inquiries on credit cards.
Besides, errors may present in the form of information related to late payments, wrong details related to open debts, bankruptcy, or collections, which you have paid in full. You may claim for any error on the issued credit report and ask the bureau to remove it. The credit bureaus and their team will investigate your report claim and report it within only 30 days.
Maintain Your Low Credit Balance
Credit reporting agencies never like high credit balances. When you increase your credit, it affects your overall credit score adversely. In this situation, you should use the credit utilization ratio to know the total used credit. According to the experts, you should keep the credit utilization ratio below or at least equal to 30%.
Pay Your Credit Card Bills on Time
Paying off your credit card balances timely is the most effective way to improve yourcredit score. Payment history is a crucial factor to rank your credit score. Late payments on your existing credit indicate negative information. Your credit score will damage a lot if you have frequent late payments. You should start making credit card bills before they become due to revive your score even when you have skipped paying off your bills timely in the past.
Limit Your Credit Checks or Credit Applications
Whenever you apply for credit cards in Canada, the bureau will check or investigate your credit based on the following two types-
Hard-hit credit checks will display in your credit report and they will influence your overall credit score. Any individual who sees your credit report will see such inquiries. Common examples include your mortgage or credit card application, a few rental applications, and employment applications. If you have too many hard-hit credit checks in your report, lenders may perceive that you seek credit urgently or try to live beyond the means.
Soft hit credit checks appear in your credit report but only a credit card holder may see it. These checks never affect the overall credit score. An example of a soft hit isrequesting your credit report. Alternatively, a soft hit takes place when you ask any business to provide you the credit score to update the records on your existing accounts with them. If you want to control the credit check numbers in your credit report, you should-
• Limit the number of your credit card applications
• Get quotes from reputed and diverse lenders whenever you shop around to get a mortgage or car loan that too within 2 weeks. Later, the bureau will combine your inquiries and treat them as one in the case of urgent requirements.
• Make sure you apply for a credit card only when you require it.
Use Multiple Credit Sources
Make sure to keep and use multiple credit sources or credit accounts. These include installment loans, credit cards, mortgages, credit lines, and many more. Your ability to manage diverse credit facilities will indicate that you are a reliable borrower. Moreover, your mix of credit sources will affect only 10% of your credit score.
Securing and maintaining a good credit score or credit rating is very much essential for people in Canada. Good credit scores make sure you qualify for improved interest rates on mortgages and various other loans in the future. Therefore, apply the most appropriate approach to see a drastic improvement in your credit score that too within only one month.