Your credit score is a number that represents your creditworthiness at a moment in time. If you are trying to improve your credit rating, there's only one way this can be accomplished.
There is No Secret to Improving Your Credit Score
Your credit score can range from 300-900 and it is constantly changing. This is because it is being calculated based off of the information contained in your credit reports, which is continuously being updated. The two Canadian credit reporting agencies, Equifax and TransUnion, collect your credit information and compile your credit reports.
Here's a great way of looking at it: think of your credit reports as a school paper, while your credit score is the grade you get on it.
If you are looking to improve your credit rating, listen up. There's no magic spell or quick solution to improving your credit. There's only one way to do it. You simply need to understand how your score is calculated and do what needs to be done to better your credit profile in relation to those scoring factors.
There are many different credit scoring models, but here is a general breakdown from Equifax of the factors that determine your credit score and how heavily they are weighted:
So, you need to look at these factors and use them to your advantage when trying to rebuild your credit score.
Ways to Improve Your Credit Rating
Here are a few ways that you can work to improve your credit rating.
Your payment history is the single largest determining factor when your credit score is calculated. Therefore, if credit building is your goal, you need to pay all of your bills on time and in full. If you are late on any accounts, it is important to get current with them as quickly as possible.
Your credit utilization ratio is the amount of credit you are using compared to the amount you have available. As a rule of thumb, it's best to keep all of your credit cards below 30 per cent of their limit. Of course, it is best if you pay your credit card balances in full every month.
The number of types of accounts you have will also play a role. The people with the best credit scores maintain a healthy mix of both installment credit (loans) and revolving credit (credit cards). Also, you only want to apply for credit when you absolutely need it. Opening too many new credit accounts at the same time can affect your ability to obtain credit in the future.
Auto Financing for those with Poor Credit
It can be tough to get approved for credit if you just started working to improve your credit scores. If you need to get approved for an auto loan and your credit is holding you back, Canada Auto Loan can help.
A car loan is a type of installment credit that will boost your credit mix and give you the chance to improve your credit with every on-time payment. We can help you find the dealership in your area that can get you approved for an auto loan, even if you are dealing with credit issues.
All you need to do to get started is fill out our free and secure online application. We look forward to helping you!